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 18, 2014.

Using October lean hog futures the weaner pig breakeven price is $79.32 down $0.23 for the week. Feed costs were up slightly this week and the October futures were basically unchanged. The spread between the August and October futures contract widened by $5.13 to $22.60. The breakeven price is based on closing futures prices on April 17, 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 $101.15 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

4/17/2014

Weekly Change

Weaner pig breakeven

$79.32

($0.23)

Margin over variable costs

$101.15

($0.23)

Pig purchase month

May, 2014

May, 2014

Live hog sale month

Oct, 2014

Oct, 2014

Lean hog futures

$99.30

$0.02

Lean hog basis/cwt

($1.17)

$0.00

Weighted average sbm futures

$456.99

$12.10

Weighted average sbm basis

($4.36)

$0.00

Weighted average corn futures

$4.98

($0.04)

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

$93.86

$0.27

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 17,364 head reported, which is 54 percent of the 52 week average. Cash prices were $80.70 per head, down $5.64 from the previous week.


Reported

Weekly change

Cash sale weaner pig volume

17,364

(11,373)

Weighted average cash price/head

$80.70

($5.64)

Cash low price/head

$65.00

($13.00)

Cash high price/head

$98.00

$0.00

Graph 1 shows the seasonality of weaner pig prices the past 3 years compared to the current year. Weaner prices are likely to be pressured as buyers start to look at hedging hogs using the December contract. The December contract is roughly an $11 discount to October and a roughly $32 discount to August.

The number of reported weaner pigs sold on a formula basis was 41,381 head at an average price of $47.25. That’s down $4.88 per head from the previous week.

Graph 2 shows weaner and feeder pig reported cash prices over the past three years through April 17. The graph shows that feeder prices typically lag weaner price changes.

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.