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Brumm: Are Sew Price Peaking?

Jan 10, 2017

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By Mike Brumm

With the start of the new year I’ve spent part of this week updating the automatic graphing that I use on several of my historic data sets. This includes not only USDA hogs and pigs inventory numbers but also mandatory price reporting and feeder pig price reporting. During the updates I’ve had time to review many of the data series.

I know it will happen every year, but I continue to me amazed at how fast the cash price for SEW pigs rises following the later summer/fall low. In 2016 the lowest SEW average price paid was $12.72 per pig for the week ending October 7. In the 13 weeks since then the price has risen to the $53.77 per pig price reported in this afternoon’s report.

Feed prices have remained relatively steady since October. As such, the cost to grow the purchased pig to slaughter weight hasn’t changed much. Yet the buyers are now paying $41.05 more per pig. One can easily conclude that the buyers fully expect the slaughter market to be $18-20/cwt carcass weight basis higher when these pigs are sold than the pigs purchased in mid-October.

In the past 10 years, the yearly high average price in this data series has generally occurred in mid to late January. This is a reflection that weaned pigs purchased after this date are now being priced for slaughter on the October and then the December Board of Trade, contracts that are historically the lowest prices of the year. The only exception was in 2014 when the PEDv outbreak drove prices to record highs as producers searched for pigs to fill barns and slaughter contracts. That year the yearly high occurred on the week ending on March 21 when SEW’s averaged $91.41/pig.

Source: Mnpork