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 May 9, 2014.

Looking at November sales of hogs shows a weaner breakeven of $63.63, a decrease of $3.87 per head. December lean hog futures were down $0.55 along with a wider basis estimate. Feed costs were down $0.65 per head. The spread between the August and December futures contract widened by $1.59 this week to $28.78. Breakeven prices are based on closing futures prices on May 9, 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 $85.46 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

5/9/2014

Weekly Change

Weaner pig breakeven

$63.63

($3.87)

Margin over variable costs

$85.46

($3.87)

Pig purchase month

May

May, 2014

Live hog sale month

Nov

Nov, 2014

Lean hog futures

$93.93

($0.55)

Lean hog basis/cwt

($3.92)

($1.67)

Weighted average sbm futures

$443.35

($16.82)

Weighted average sbm basis

($1.89)

$2.60

Weighted average corn futures

$5.00

$0.04

Weighted average corn basis

($0.28)

($0.04)

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$93.15

($0.65)

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 above average with 41,413 head reported, which is 133 percent of the 52 week average. Cash prices were $78.75 per head, down $0.99 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

41,413

27,959

Weighted average cash price/head

$78.75

($0.99)

Cash low price/head

$62.00

($2.00)

Cash high price/head

$83.50

($6.50)

Graph 1 shows the seasonal trends of the weaner pig cash price.

The number of reported weaner pigs sold on a formula basis was 26,658 head at an average price of $47.13. That’s down $0.88 per head from the previous week.

Graph 2 shows the difference between the estimated breakeven and the weaner pig cash price. Over the past year the average difference has been roughly $6.75 per head. Currently the cash price is over the breakeven price for a profit opportunity of negative $16.11.

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.