Dave Delaney, livestock market adviser at ever.ag, spoke to AgriTalk’s Chip Flory during World Pork Expo. Delaney, who negotiates hogs every day with packers, says 1% to 2% of hogs price the other 98%.
In the current market, he thinks the biggest challenge is on the demand side.
“I have never ever had unmarketed hogs,” he told Flory during the first week of June. “We’re going into the next week with unnegotiated hogs. It feels like fall to me. We’ve got packers that don’t want to kill any more pigs. We’ve cut back on Saturdays. This week we’re going to kill about 2.4 million. There’s more out there, and there’s some weight to these pigs, but they don’t want to kill any more because they don’t want to have that extra meat.”
Flory states market-ready hogs are getting backed up in the marketplace.
“We carried about 20 loads from last week to this week,” Delaney says. “We’ll probably carry 35 into next week.”
With the slowdown in demand for the hog, what does pork demand look like?
“Overall pork demand is OK,” Delaney says. “We still have a cutout that’s $100, which is certainly OK. I think our exports have been OK. When it comes to domestic demand, we’re starting to see the pinch on some consumers from a food service standpoint.”
Fast food and retailers aren’t offering a lot of pork. One of the issues Flory sees and experiences firsthand is how undervalued the pork loin is.
“I was able to buy two loins for $1.49 per pound,” he says. “I cut them into 16 pork chops for about $1 a chop. We’ve got to bring some value to that product.”
“We’ve been fighting it for years,” Delaney adds. “Everybody wants to make more belly so we can sell more bacon, right? The undervalued loin is the best part of the pig. If it’s cooked right, prepared right, it’s better than any steak you’ll ever have.”
Risk Management For Producers
Since Delaney negotiates hogs every week, he and his team understand the need to manage risk and hedge breakeven.
“Limit loss sometimes, depending on what the forward curve looks like,” he says. “We’ve been recommending hedging on this last $8 drop on the hog side. We’ve been a little patient on the grain side and the input side, but we’re feeling like it’s time to start doing a little bit on that side as well.”
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