Cooney: Weaner breakeven price plummets to $62.67

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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 April 25, 2014.

As we move from forecasting sales under the October futures to the December futures the weaner breakeven price drops $16.65 per head this week to $62.67. December lean hog futures were up $2.53 for the week and feed costs were up $1.28 per head. The spread between the August and December futures contract narrowed by nearly $4 this week but is still $29.17. Breakeven prices are based on closing futures prices on April 25, 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 $84.50 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

4/25/2014

Weekly Change

Weaner pig breakeven

$62.67

($16.65)

Margin over variable costs

$84.50

($16.65)

Pig purchase month

May, 2014

May, 2014

Live hog sale month

Oct, 2014

Oct, 2014

Lean hog futures

$91.28

($8.02)

Lean hog basis/cwt

($0.75)

$0.42

Weighted average sbm futures

$460.79

$3.80

Weighted average sbm basis

($4.49)

($0.13)

Weighted average corn futures

$5.09

$0.11

Weighted average corn basis

($0.24)

$0.00

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$95.14

$1.28

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 22,430 head reported, which is 71 percent of the 52 week average. Cash prices were $80.10 per head, down $0.60 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

22,430

5,066

Weighted average cash price/head

$80.10

($0.60)

Cash low price/head

$60.00

($5.00)

Cash high price/head

$91.00

($7.00)

Graph 1 shows the weaner pig volume on a four week basis. Volume year to date is just 54, 63 and 65 percent compared to the previous 3 years respectively.

click image to zoomRyan Cooney, EPigFlow

The number of reported weaner pigs sold on a formula basis was 26,082 head at an average price of $47.13. That’s down $0.12 per head from the previous week.

Graph 2 shows weaner and feeder pig reported cash prices over the past three years through April 25. Weaner and feeder prices have both dropped about $10 per head in the last four weeks.

click image to zoomRyan Cooney, EPigFlow

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.



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