Cooney: Weaner breakevens up again

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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 Feb. 7, 2014.

The weaner pig breakeven price is $89.62, up $3.06 for the week. August hog futures were $2.15 higher for the week. Assumptions are based on weaner pigs being placed in early March and marketed under the August futures contract to avoid the steep August to October inverse of nearly $15. The breakeven price is based on closing futures prices on February 7, 2014 and the assumptions outlined below.

Margin over variable costs was $111.45 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

2/7/2014

Weekly Change

Weaner pig breakeven

$89.62

$3.06

Margin over variable costs

$111.45

$3.06

Pig purchase month

Mar, 2014

Feb, 2014

Live hog sale month

Aug, 2014

Aug, 2014

Lean hog futures

$103.00

$2.15

Lean hog basis/cwt

($1.99)

$0.00

Weighted average sbm futures

$433.40

$13.20

Weighted average sbm basis

($4.55)

($9.50)

Weighted average corn futures

$4.55

$0.13

Weighted average corn basis

($0.09)

($0.02)

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Feed costs per head

$89.67

$1.32

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 36,596 head reported, more than double the number reported the previous week. Cash prices were $84.73 per head, up $1.63 from the previous week.

Graph 1 shows cash and formula weaner pig prices per head starting in 2011. Over the whole period reported cash prices averaged $1.45 less than reported formula prices. Over the last 10 weeks cash prices have averaged roughly $33 more than formula prices. That is the largest cash to formula difference with the next largest being the summer of 2012 when cash prices averaged nearly $26 lower than formula prices for a 10 week period.

click image to zoomCooney

 

Reported

Weekly change

Cash sale weaner pig volume

36,596

19,783

Weighted average cash price/head

$84.73

$1.63

Cash low price/head

$70.00

($4.00)

Cash high price/head

$91.00

$3.00

 

 

 

 

The number of reported weaner pigs sold on a formula basis was 42,944 head at an average price of $48.05. That’s down $1.45 per head from the previous week.

ePigflow is collecting and reporting facility information. Below is a sample of facility contracts that have been written in the past 12 months.

  click image to zoomCooney

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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