Commentary: Hog futures up, weaner prices down

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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 October 4, 2013.

The weaner pig breakeven price is $59.99, down $0.89 from last week due to a wider estimated hog basis. Corn continued its downward trend, losing $0.36 since the end of August. Hog futures continued climbing, increasing for the sixth consecutive week. The breakeven price is based on closing futures prices on October 4, 2013 and the assumptions outlined below.

Margin over variable costs was $$81.82 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

10/4/2013

Weekly Change

Weaner pig breakeven

$59.99

($0.89)

Margin over variable costs

$81.82

($0.89)

Pig purchase month

Oct, 2013

Oct, 2013

Live hog sale month

Apr, 2014

Mar, 2014

Lean hog futures

$90.32

$0.24

Lean hog basis/cwt

($5.41)

($1.09)

Weighted average sbm futures

$421.34

$3.27

Weighted average sbm basis

($11.86)

$1.25

Weighted average corn futures

$4.54

($0.10)

Weighted average corn basis

($0.15)

$0.00

Nursery cost/space/yr

$35.00

$0.00

Finisher cost/space/yr

$40.00

$0.00

Other feed cost

$21.50

$0.00

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

USDA data was not available this week due to the government shutdown.

July through September of this year has shown positive margins for buying weaner pigs with an average difference between the USDA reported price and weaner pig model breakeven of $12.43 per head.

 

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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