The week ending Sept 24th was the 3rd largest weekly kill ever in the United States, followed by week ending Oct 1, which was the 4th largest weekly kill. I think that says a lot about prices, both why we are here and where prices are going, writes Allan Bentley.
I made a prediction that we would break more than half the top 10 slaughter weeks this year. Two are in the books in September. If we are breaking slaughter records in September, what will the numbers be in December?
Packing capacity will be stretched to the limit to an extent that we have not seen since 1998. As I write this, I am learning of a sow processor that is going to be dark. That should keep us from breaking another weekly slaughter record. However, that will not help the cull sow market.
I visit from time to time with technical chartists, and I have told them to throw their charts and algorithms out the window. Supply and Demand will dictate prices over the next few months. Those chart guys explain to me that we are in the middle of wave number 3 or 4 or whatever. I have replied back, “whatever phase we are in will be washed over by the oversupply coming at us”.
The Hogs and Pigs Report came out on Friday, September 30thand it stated the “over 180 lbs hogs” category was up 4% from last year as of September 1. Most of those pigs should have been slaughtered by now. The actual slaughter numbers for September was up 6% according to the USDA reports. I believe there were a couple weeks that may have been 8% higher than in 2015. Does that mean the report numbers are too low?
Some might say we are pulling hogs forward. If that was true, slaughter weights should be lower, but slaughter weights are higher. Corn prices below $3.00/ bushel will not help slaughter weights come down much either.
Fewer sows have been exposed to the PED virus. As winter comes and disease pressure increases, could those sows be more vulnerable? I think that is something we need to keep an eye on. Nothing like PED virus to control the supply.