Pork Commentary
Jim Long President – CEO Genesus Inc.
October 27, 2022
Friday to Friday, December lean hog futures were $6.88, and February up $7.10. A $15 per head gain.
We have written several weeks in a row that summer lean hog futures in the mid-’90s were borderline insane. Friday, June, July, and August closed $1.03 – $1.04. Right direction but a long way from the plus $1.20 we expect to see.
Last week’s U.S. Pork Export Sales report indicated 40,800 metric tonnes of pork sold. The highest weekly sales since March of this year. The last four weeks have averaged 35,000 metric tonnes. After weeks upon weeks this summer around 20,000 tonne average. The increase in export sales is supporting Hog Prices near a $1.00 lb. We expect as China and Europe’s hog production continues to decline the world’s pork importers will have to chase and pay more for pork.
China
In the U.S. the government releases oil reserves to curb inflation. In China, the government releases pork reserves to curb inflation. Obviously, pork is more important in China than in the U.S. Doubt if U.S. government leaders even know the price of pork, recognition of the importance of the U.S. pork industry can be seen in their reneging of CFAP 1 top-up payments. The same CFAP 1 top-up they paid to corn producers, the industry of $ 7.00-bushel corn.
The China hog price continues to rise despite the release of pork reserves. As we have written for months the billions of dollars lost by China’s industry from July 2021 to May 2022 was leading to massive sow herd liquidation. It did. This past week China’s hog price averaged 28.46 RMB/kg ($1.77 U.S liveweight lb.), on April 1 it was 89¢ lb. U.S. On the first of September, the price was $1.47. Despite several China releases of pork reserves, the price has risen 30¢ lb. or $80 per head. We expect huge amounts of pork to go to China to fill the void of the huge decrease in pork production.
Summary
U.S. stronger lean hog futures, cash hogs, and export sales are a reflection of the decline in U.S. and global production. Historically the hog cycle has next to no correlation to macro-economic conditions i.e., inflation, interest rates, and unemployment. We expect hog prices will reach new highs as we move into 2023 from lack of domestic and global supply.
A Passing of a Giant
On October 10 William (Bill) Prestage passed away from COVID issues, he was 87.
Bill Prestage started as a feed salesman in Michigan, he moved his family to North Carolina. Formed a partnership with Otis Carroll, then they built a large turkey and swine company. After Otis passed away in 1982, Bill sold his interest and started Prestage Farms producing Turkeys and Swine.
The Prestage Farms and Prestage Foods family of companies has five divisions across seven states with three processing plants collectively employing more than 2,300 employees and contracting with over 450 farm families. Prestage Companies produce 1.4 billion pounds of pork and turkey annually. Prestage has 178,000 sows on the Genesus World Mega Producer list.
A while ago I was in Prestage Corporate office in North Carolina. An office fitting for one of America’s largest family-owned meat protein companies. In the office, the reality of Prestage being a family business is obvious with large pictures of the Prestage family in the entrance and foyer. Bill and his wife Marsha, 3 sons, and 5 grandchildren are actively engaged in the business. A legacy that any patriarch and matriarch of a family business would treasure. In farming one of the strengths and benefits of our industry is the ability to have family of multi-generations working together and building business that can last for generations.
I never met Bill Prestage but about 35 years ago he spoke at the Michigan Pork Congress held in Battle Creek, Michigan. Bill was from Battle Creek so it was a homecoming. Already at that time, Bill had built a large farming organization. I can still visualize him speaking. It was clear, it was positive, and it was visionary of the future of the pig industry. A vision that came to fruition. I have heard many speakers but he was one of the few that was memorable.
Bill Prestage started with next to nothing. His hard work, vision, and salesmanship put together a team including his family that has built an agriculture empire. Quite the legacy. A giant in our time.
The following link tells a more complete story of William (Bill) Prestage:
