Has producer market behavior changed?

So far this fall, we’ve been able to remain current in our slaughter of pigs. Based on carcass weights as reported in the daily mandatory report (LM_HG201) it appears that producers have been very aggressive in pulling pigs forward, rather than facing a possible packer capacity issue. Obviously, it also helps that the consumers are consuming our production as witnessed by the lack of increase in frozen stocks.

I dug into the ‘201’ data to further understand how much different producer marketing behavior was this fall versus the previous 5 years of data (2011-2015). I compared the weighted average carcass weight for producer sold versus packer owned pigs for the Friday prior to Labor Day and the Friday prior to Thanksgiving for the past 6 years.

For packer owned pigs, carcass weight increased an average of 8.5 lb from September to November for the 5 years of 2011 through 2015. For producer sold pigs, carcass weight increased 5.9 lb for the same period. In contrast, this years’ increase in packer owned and producer sold pigs was 6.5 vs 1.4 lb.

In 2011 through 2015, packer owned pigs increased in carcass weight an average of 2.4 lb more than producer sold pigs. I don’t think this represented a difference in market behavior between the groups. Rather, much of it was probably a reflection of the geography of where pigs are reared. Much of the packer owned pigs are represented by pigs in the southeast and the high plains where summer heat can be a real challenge to pig performance. The cooler fall weather at these locations versus the less dramatic change in summer versus fall (in terms of the thermal neutral zone within the pig barn) for the upper Midwest would be expected to generate a larger increase in summer versus fall performance.

In contrast, this year the packer owned versus producer sold difference in November versus September weights was 5.1 lb. This suggests that slaughter sales from packer owned facilities tended to follow traditional patterns while sales from producer owned facilities were different.

For producer sold pigs, with prices dropping almost daily, the pressure was on to sell pigs as soon as possible, in addition to producers being concerned with packer access if slaughter capacity were to be tested. For packer owned pigs, the economics of sales is not dependent on slaughter pig price. Rather, their market decisions are based on the overall economics of meat production (live pig production cost versus the value of the resultant slaughter products).

Unknown so far, is the behavior of producers as reflected in the lack of weight increase in producer sold pigs a one year phenomena or is it an underlying shift in behavior as they become more aware of risk management strategies associated with fall slaughter patterns (more pigs and weight and less dollars per pig due to falling prices)?

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