Road Trip Starts
As we write this week’s commentary, we are flying over the mid-Atlantic. We are heading to Great Britain, Netherlands, Germany, Lithuania, Russia, and Spain over the next three weeks – we will report our observations on swine activities in each of these countries.
当我们写下本周的评论时，我们正在飞越大西洋。我们在接下来的三周内正前往英国、 荷兰、 德国、 立陶宛、 俄罗斯和西班牙，我们将报告我们对这些国家养猪业的观察。
US Crop Production
Last week the USDA released their crop production projections. Corn, soybeans, sorghum and grain all came in at projection levels higher than expected. The corn crop of 13.686 million bushels and soybeans at 3.916 million bushels all but assures feed prices trading in current ranges for the next several months. September corn has now decreased 80¢ a bushel on July 13 ($4.42) to $3.64 a bushel last Friday. The fear of too much rain making the corn crop yield lower has dissipated. When I was a child, my Father always said, “Rain makes grain”. It appears the market sometimes forgets some realities. The USDA projects national corn yields of 168.8 bushels per acre. Excellent yields!
上周，美国农业部发布他们的作物产量预测。所预测的玉米、 大豆、 高粱、 谷物水平都高于预期。1368.6万蒲式耳的玉米产量和391.6万蒲式耳的大豆产量基本确保了饲料交易价格将在未来几个月保持在当前的水平。9月的玉米期货已经从7月13日的每蒲式耳4.42美元跌至上周五的每蒲式耳3.64美元，下跌了80美分。雨水过多会影响玉米产量的忧虑已经消除。在我小的时候，我爸爸总是说，“雨水带来收成”。看来，市场有时会忘记一些现实。美国农业部预测全国玉米产量为每英亩168.8蒲式耳。极高的收益！
Oil is $43 per barrel – used to be over $100. Low oil does not help ethanol demand or corn prices.
The US dollar index about 20% higher than a year ago is not helping US corn exports.
If crop is what USDA says, there will be lots of feed in 2015 – 2016 and prices should stay around where we are.
USDA pork cut – outs last week were $89.96 per pound and with over 2.2 million hogs marketed, a very strong price considering the volume of pork.
US National 53 – 54% market hogs were $77.67 last week. The spread between pork cut outs $89.96 compared to markets at 77.67 or 12₵ a pound gives us an indication packers are making good money.
A year ago, US carcass weights were at 215 pounds, currently they are about 209 pounds. The 6-pound carcass spread or about 8 pounds liveweight indicates to us marketings are significantly more current than last year. The lighter carcasses 2.2 million head times and 6 pound means less pork and is supporting prices.
Current US Cash early weans of $21.06 will not be stimulating sow herd expansion. Indeed it is probably leading to some liquidation.
China last week released their June inventory report. The June live hog inventory showed a total of 384.61 million head down 10% year on year. The sow inventory was 38.99 million head, down year on year by 14.8%. The Chinese sow herd has declined for 22 consecutive months. China’s sow inventory in May was 39.26 million, in June 38.95 the decline was another 300,000 sows. The huge decline due to lack of profit is unprecedented, over the last 22 months a decline of 11.6 million sows.
The Market Hog Inventory prior to the liquidation beginning 2 years ago was 444.37 million head. In June it was 384.61 a 60 million head decline. Our arithmetic says that’s down 2 million head a week for market. It is going to go higher as the sow herd liquidation over the last six months has not influenced the market inventory fully. Hog price China mid-April was 85¢ per pound US, last week $1.28 per pound.
Last year we has the bullish market effect of PED. Front-page news outside the farm world. The perception of pork shortage helped push hog prices higher than they should have gotten to. They were real prices and most everyone had their best year for profit ever!
This year the spectre of expansion, lack of shackle space, and pork glut perception have had the opposite effect. The news that has been focused on is negative. That’s why China can be so important. The bullish effect of China needing a big supply of pork will not only pull hog prices due to hog needs but just as importantly the bullish effect to attitude will give prices a boost. China is and will be stepping into the market. China is the bullish reality and the story we need.