Cooney: Weaner breakevens climb $30 in just two weeks

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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 July 11, 2014.

Weaned hogs Pricing off the February lean hog contract for January sales shows a weaner breakeven of $89.21 up $10.36 for the week. That's an increase of over $30 in just two weeks. The February lean hog contract was up $2.30 for the week. Feed costs were down $4.05 per head. The spread between the August and February futures contract narrowed by $5.15 to $30.40. Breakeven prices are based on closing futures prices on July 11, 2014 and the assumptions outlined below. The breakeven price is the estimated maximum you could pay for a weaner pig and breakeven when selling the finished hog.

For the Week Ended

7/11/2014

Weekly Change

Weaner pig breakeven

$89.21

$10.36

Margin over variable costs

$111.04

$10.36

Pig purchase month

Jul, 2014

Jul, 2014

Live hog sale month

Jan, 2015

Dec, 2014

Lean hog futures

$98.35

$2.30

Lean hog basis/cwt

($3.76)

$0.80

Weighted average sbm futures

$368.71

($19.66)

Weighted average sbm basis

($2.69)

$0.00

Weighted average corn futures

$3.84

($0.30)

Weighted average corn basis

($0.25)

$0.01

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$77.48

($4.05)

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 38,433 head reported which is 129 percent of the 52 week average. Cash prices were $75.55 per head, down $1.05 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

38,433

3,931

Weighted average cash price/head

$75.55

($1.05)

Cash low price/head

71.75

$3.75

Cash high price/head

$80.00

($1.00)

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

  click image to zoomRyan Cooney

The number of reported weaner pigs sold on a formula basis was 30,963 head at an average price of $46.45. That’s down $2.03 per head from the previous week.

Graph 2 shows the cash weaner price and cash feeder price on a weekly basis through July 11.

 

Graph 3 shows the estimated profit opportunity by comparing the weekly weaner cash price to the breakeven price. With two weeks of big increases in the breakeven price the estimated profit opportunity is over $13 per head.

  click image to zoomRyan Cooney

Ryan Cooney is director of market development for Nutriquest and general manager of ePigflow, a free 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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