Author: Jim Long President – CEO Genesus Inc. – January 7, 2013
US Industry losing $40 per Head!
Sterling Marketing of Vale, Oregon does a weekly calculation of farrow to finish profitability. The latest weekly calculation was a loss of $40.38 per head. Nasty, Nasty, Nasty. If correct, a loss for the industry approaching $100 million a week. Last year the same week the loss was $16.12 per head.
Feed costs for the week ending December 28th were estimated at $123.54 for hogs placed into finishing.
It’s amazing that despite the huge financial losses that have been ongoing, the USDA December 1st Hogs & Pig Report indicates the breeding herd was expanding. We don’t believe it, no way.
Maybe we are crazy but the industry will never expand when going back a billion dollars in the last few months.
We are in the breeding stock business. We see who’s buying and who’s not. There is no expansion of significance, a handful of new units, while many units shut down or cut numbers. No way that there will be more net sows when the dust settles. Never has there been and never will there be expansion when hog to corn ratios are 10 to 1 and losses amount to 100’s of millions of dollars. Who is funding the expansion? Banks? They give you umbrellas on sunny days. This is not a sunny industry.