Feeder pig prices

The demand for good quality weaned pigs and feeder pigs is heating up several weeks earlier this year than compared to historic records. In the past 10 years (2003-2012), weaned pig prices as reported by USDA (http://www.ams.usda.gov/mnreports/NW_LS255.txt) bottomed during week 33 of the year (mid-August). The peak spot market price occurred in January to early February.

This year it appears that the low in SEW spot pricing occurred the last week of March ($23.80/pig) with a secondary low occurring the 3rd week of May ($24.97/pig). This past week USDA reported an average spot price of $31.97/pig.

The same shifting of seasonal pricing has been occurring in the 40 lb feeder pig market. The traditional low price for the year traditionally occurs in the late July-August period. This makes sense as pigs placed in grow-finish facilities at this time would be sold to slaughter in mid-late November, the time of year that corresponds with the historic lowest prices of the year and highest numbers of pigs slaughtered per week.

This year the apparent lowest prices for 40 lb feeder pigs occurred during the last week of May with a $45.92/pig average spot price reported by USDA. This past week these same pigs had a spot price of $50.43/pig.

I think there are 2 big drivers of this shift in the timing of pig prices to fill wean-finish and grow-finish spaces. One is the pricing of new crop corn and soybean meal. Pigs placed in wean-finish facilities today will consume a majority of their tonnage of feed comprised of diets formulated with feed grains priced in October and November (new crop vs old crop price spread). Some of the difference in pig pricing reflects the expectation of a large reduction in feed cost per unit of gain.

The second driver of high pig prices is the growing number of open facilities. I’m hearing from a large number of sources that we currently have an excess of facilities available for rent/contract grow-out, either on a long term basis or a spot market basis. Some of these facilities are open because of newer facilities being constructed by production systems with existing contracted spaces being replaced by the newer spaces. I have seen grow-finish facilities offered as low as $8/space/turn. This compares to a historic pricing of $13.50/space/turn.

Some of the facilities represent openings because of a reduction in SEW and feeder pig numbers from Canada due to the down sizing of their industry and the confusion the still remains over Country of Origin labeling regulations. So far this year this is about 10,000 fewer pigs per week compared to the last 3-4 year average.

Finally, lots of speculation regarding the impact of the PED virus on pig numbers – have enough sow units been hit by this virus to really impact the total availability of pigs for grow out? There isn’t enough evidence to directly link weaned pig and feeder pig prices to this disease but the speculation exists.

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