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| Here is my guess,
1. the minute there was a penny of profit many producers locked contracts at what look like low prices right now - I dont think this shows up on this report though.
2. lots of sows on the market and lots of gilts being bought - quality of pigs may have suffered due to not replacing sows (couldn't afford to) could this account for some variability?
3. Things like circo and para suis are still making our pigs more uneven that in the past. It's improving, but we've typically had at least one load suitable for packers wanting 180-220lb pigs. (the other pigs are 260lb).
4. Cargill only pays top $ to producers with more than 20K sows and wants to ruin everyone else. Probably not. With the herd size reduced and probably more to come as soon as a few producers wanting to leave get close to a point where they can get out, I would say they need all the pigs they can get.
5. Pig variation might be coming from close outs as well. We forget the 'closing out' process isn't particularily fast.
These are just guesses and we tend to be contract (from the little I know about it) and it seems like the contract is generally representative of what the market is offering at that time. I've heard talking heads talk about possible expansion and I suppose a few empty barns could get filled again, but after all this would anyone consider building except to replace current facilities while the interest rate is low? The cattle guys are in record low herd size territory and still struggle to be profitable. While we might be out of the woods and profitable now, we have no guarantee that the economy won't turn down again and put pressure on prices. The wild card is will the funds prop up prices indefinitely?
Thanks,
Pat | |
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New rules from USDA regarding livestock act
