Liveweight is going up

I have been tracking the Iowa-Southern Minnesota live weight at slaughter (http://www.ams.usda.gov/mnreports/NW_LS270.txt) for several years. This report gives me some insight on producer’s thoughts and possible production plans.

The average weekly live weight since 2004 has been:
2004 264.3 lb
2005 266.4 lb
2006 267.1 lb
2007 266.8 lb
2008 265.1 lb
2009 268.5 lb

Historically, prior to 2006, live weight increased 1-2 lb/yr. The impact of the rise in corn price due to the explosion in ethanol production becomes evident in 2006 as the rate of increase first slowed in 2006, and then even declined in 2007 and 2008. The increase in weight in 2009 was mostly due to the very cool weather in the region during the traditionally warm months of July, August and September. As readers will recall, pig performance last summer was exceptional with minimal challenges to growth from extended periods of heat.

With the return of profits, data for the first 5 months of 2009 suggest that we have returned to our pattern of increasing live weights at slaughter. This year, the 2 weeks with the heaviest average sale weights have been the last 2 weeks of May, when sale weights have averaged 270.8 lb. The average for the 4 full weeks of May was 270.5 lb, the heaviest May sale weights ever recorded.

In discussions with producers the past few weeks, these large sale weights come as no surprise. The current goal of many producers is to sell the pigs as heavy as possible. With fewer pigs in grow-finish inventories, there is more barn space becoming available, often as a reduced price compared to what was being paid even last year. As long as the marginal cost of gain is lower than the added revenue, it makes sense to take pigs to heavier weights.

While the cash market is down some from the highs of a few weeks ago, many producers took advantage of the very good price offerings in the futures market. Delivering live hogs to a packer with an $87 June hedge makes pork production a fun business again.

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