Cooney: Weaner breakeven price up slightly

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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 March 7, 2014.

Weaned pigs The weaner pig breakeven price is $86.89, up $0.53 for the week. October hog futures were $3.30 higher for the week and feed costs were up $1.85 per head. The breakeven price is based on closing futures prices on March 7, 2014 and the assumptions outlined below.

Margin over variable costs was $108.72 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

3/7/2014

Weekly Change

Weaner pig breakeven

$86.89

$0.53

Margin over variable costs

$108.72

$0.53

Pig purchase month

Mar, 2014

Mar, 2014

Live hog sale month

Sep, 2014

Aug, 2014

Lean hog futures

$97.70

$3.30

Lean hog basis/cwt

$4.25

($2.02)

Weighted average sbm futures

$455.50

($2.95)

Weighted average sbm basis

($4.34)

$0.47

Weighted average corn futures

$4.91

$0.24

Weighted average corn basis

($0.14)

($0.05)

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$94.04

$1.85

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 30,643 head reported, which is 90 percent of the 52 week average. Cash prices were $88.87 per head, up $3.08 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

30,643

9,502

Weighted average cash price/head

$88.87

$3.08

Cash low price/head

$74.00

$2.00

Cash high price/head

$95.00

($0.50)

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. Time will tell if the current supply and demand pressures are enough to force the cash price to break out of the typical seasonal trend or if the seasonal trend will continue at a price roughly 50% higher than the previous three years.

click image to zoomWeaner pig

The number of reported weaner pigs sold on a formula basis was 33,575 head at an average price of $51.39. That’s down $1.64 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 14 weeks. During the same period feeder pig prices have increased nearly 40 percent.

click image to zoomWeaner pig

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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