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Feb 17, 2021

U.S. Markets Continue to Strengthen

By Dave Limoges - Feed Sales Manager

Considering a February 7, 2021, weekly slaughter of 2,664,000, U.S. pork cut-outs continue to strengthen. What will cut-outs be when slaughter in summer months declines to 2.3-2.4 million a week? $1.10 -1.20?

Weights of Market Hogs continue to decline. Experts estimate the last four weeks a 5 lb. decline. Because of this, U.S. packers have pulled hogs ahead to maintain current slaughter levels.

Some economists think the PRRS was not a factor this year any more than in any other year. Economists are also saying there has been little liquidation in the sow herds. Some experts disagree and say there has been sow liquidation, and it continues. If the economists are correct, what has been PRRS-PED's effect ripping up production at a high level? Currently, there are thousands of finishing spaces sitting empty. Empty barns mean fewer hogs.   

Cash feeder pigs touching $80, the highest price in many years. All of this with $5 corn and high soybean prices. A sign of supply versus demand.

Compared to the same time last year (January 1 to February 12), U.S. hog slaughter down 4.3% - some of this surely can be related to slaughter days year-to-date, but also points to lower production. Most months of Lean Hog Futures reached contract highs on Friday. June closed 91.90 up from 74.75 in mid-August, further upside as hog supply plummets.

Note: Contents within this article were compiled from a February 16, 2021, Jim Long commentary.
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