Current Situation and Analysis – 6/21/2024
WEAN-TO-FINISH HOG RETURNS
Iowa State University’s estimated returns for a wean-to-finish hog operation posted a profit of $21.95 per head in May, a significant improvement over the $40.04 per head loss a year ago. In May, total costs were $168.60 per head, a decline of 18% from last year. The selling price of $91.87 per cwt in May was a 17% increase over last year and a key factor to the better returns. The lower total costs and higher selling price resulted in a breakeven selling price of $83.26 per cwt in May.
Lower total feed costs in May were a primary factor contributing to the improved returns for the month. In May, total feed costs were $84.24 per head, down 26% from last year and the lowest since January 2021, which was $78.47 per head. Corn feed costs saw the largest decline, falling 33% from last year to $36.96 per head in May. Soybean meal costs were down 18% to $16.15 per head in May while dried distiller grain was down 29% to $10.96 per head.
Another factor contributing to the improved returns was a lower purchase price for a weaned pig, which was $31.47 per head in May, a decrease of 27% from a year ago of $43.37 per head. Iowa State University’s estimated returns assume a hog marketed in May was purchased as a weaned pig in November of the prior year. Based on this assumption, for June, a weaned pig would have been purchased in December of 2023, and prices averaged around $37 per head during that month.
Weekly slaughter hog prices (base, national weighted average carcass) have averaged around $90 per cwt in June, which is above the breakeven selling price of $83.26 per cwt in May. Assuming total feed costs remain around $170 per head and that the weaned pig purchase price from December 2023 is about $37 per head, June should post a profit for a wean-to-finish hog operation.
CATTLE ON FEED
USDA NASS reported that cattle on feed as of June 1 was 11.554 million head, down by less than one percent from a year ago. Analysts’ pre-report estimates were expecting cattle on feed to be down from last year, on average, by 1.1% with a range of estimates from down 1.7% to down 0.6%. Fed cattle marketings in May came in at 1.955 million head, a marginal increase of less than one percent from the previous year. Pre-report estimates were on either side of a year ago ranging from down 0.7% to up 1.2% with an average of up 0.3%, which was slightly higher than the actual.
The surprise in the Cattle on Feed report was placements. May was reported at 2.046 million head, a larger than expected increase of 4.3%. Analysts were expecting May cattle placements to be down on average by 1.7%, but the range of estimates was wide with a low of down 5.0% to up 2.4%. The actual cattle placements were outside of the range of pre-report estimates.
Looking at cattle placements by weight group, gains occurred across most weight groups. The lighter weight groups of under 600 pounds and 600-699-pounds reported increases of 3.9% and 5.0% from last year, respectively. The 700-799-pound weight category increased 1% from the previous year while the 800-899-pound weight group rose 4.7%. In the 900-999-pound and 1000+ pound weight groups, cattle placements reported growth of 7.0% and 12.5%, respectively.
POULTRY AND HPAI UPDATE
Cases of highly pathogenic avian influenza continue to occur across the U.S. Since the start of the year, USDA APHIS has reported nearly 17.5 million birds affected by HPAI, based on data compiled at the time of this writing. A majority (85%) of the cases reported this year have been commercial table egg layers, which was just over 14.8 million birds affected. Most of these cases occurred in April and May across five states: California (0.8 million), Iowa (4.3 million), Michigan (6.5 million), Minnesota (1.4 million), and Texas (1.9 million). Egg prices (combined regional, grade A large) have turned higher in recent weeks, and last week’s price was $2.56 per dozen, more than double the same week last year and the highest price since February.
USDA APHIS has reported nearly 1.1 million commercial turkey meat birds affected by HPAI since the start of the year. About half (55%) of the reported commercial turkey meat bird cases so far have occurred in May and June, totaling 591,700 birds affected across Iowa, Michigan, and Minnesota. Year-to-date through mid-June, turkey production is at 2.8 million pounds, which is 3% below the same period last year. Although production is tracking lower than a year ago, cold storage stocks in April were 6% above last year at 390.6 million pounds. Turkey prices continue to remain soft with whole bird prices (national whole hen, 8-16 pounds) averaging just above $1.00 per pound since April. Turkey breast prices (national, skinless/boneless) have turned slightly lower in recent weeks falling below $2.20 per pound.
Cases of HPAI in dairy cattle continue to occur with 115 cases now reported in 12 states across the U.S. at the time of this writing. In June, 36 cases were reported by USDA APHIS in dairy milking cattle, and these cases covered a broad geographical range across the U.S. hitting Idaho, Iowa, Minnesota, Texas, Wyoming, Colorado, and Michigan. The most recent retail price for milk reported by USDA ERS was $3.86 per gallon in May, down 4% from last year.
