This market update is a PorkNetwork weekly column reporting trends in weaner pig prices and swine facility availability.  All information contained in this update is for the week ended March 14, 2014.

The weaner pig breakeven price is $86.72, down $0.16 for the week. The drop in price was driven by a lower hog basis estimate. It should be noted that the October futures contract increased $1.05 while the August futures contract increased $5.52 for the week. The August to October contract spread was $23.55. If you are looking to hedge September sales a straight hedge against the October contract will not be your best option. The breakeven price is based on closing futures prices on March 14, 2014 and the assumptions outlined below. The breakeven price is the estimated maximum price you could pay for a weaner pig and breakeven when selling the finished hog.

Margin over variable costs was $108.56 and refers to the revenue generated from raising a weaner pig that contribute to fixed costs and pig purchase costs. In other words, if the alternative is to idle facilities every dollar between the purchase price and margin over variable costs contributes toward covering those fixed costs such as facility, labor, utilities, property taxes and insurance.

For the Week Ended

3/14/2014

Weekly Change

Weaner pig breakeven

$86.72

($0.16)

Margin over variable costs

$108.56

($0.16)

Pig purchase month

Apr, 2014

Mar, 2014

Live hog sale month

Sep, 2014

Sep, 2014

Lean hog futures

$98.75

$1.05

Lean hog basis/cwt

$2.25

($2.00)

Weighted average sbm futures

$435.46

($20.04)

Weighted average sbm basis

($4.15)

$0.19

Weighted average corn futures

$4.89

($0.02)

Weighted average corn basis

($0.18)

($0.04)

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$92.37

($1.67)

Assumed carcass weight

205

0.00

Note that the weaner pig profitability calculations provide weekly insight into the relative value of pigs based on assumptions that may not be reflective of your individual situation. In addition, these calculations don’t take into account market supply and demand dynamics for weaner pigs and space availability.

National Direct Delivered Feeder Pig Report

Cash traded weaner pig volume was below average with 19,485 head reported, which is 58 percent of the 52 week average. Cash prices were $86.65 per head, down $2.22 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

19,485

(11,158)

Weighted average cash price/head

$86.65

($2.22)

Cash low price/head

$80.00

$6.00

Cash high price/head

$92.00

($3.00)

Graph 1 shows the seasonal trends of cash wean pig prices over the past three years. Compared to the previous three years the average year to date cash price has been 44 to 66 percent higher. It appears the current supply and demand pressures have at least delayed the seasonal drop in prices we normally see during February and March.

The number of reported weaner pigs sold on a formula basis was 35,220 head at an average price of $52.11. That’s up $0.72 per head from the previous week.

Graph 2 shows weaner and feeder pig reported cash prices over the past three years. The graph shows that cash feeder prices typically lag the trends of cash weaner prices. Cash weaner prices have been trading in a 10 percent range for the past 15 weeks. During the same period feeder pig prices have increased nearly 40 percent.

Ryan Cooney is general manager of ePigflow, an online market for weaner pigs, feeder pigs and facility spaces. You can find available pigs and facilities by visiting www.epigflow.com.