February 6, 2008

US feeder pig prices erratic but slowly moving up

US feeder pig prices on negotiated sales have been erratic in recent weeks, but the overall trend is slowly moving up.

Feeder pigs placed into the finishing barns now will be ready for slaughter by May through early July, depending on what the pigs weigh when purchased.

Corn and soymeal make up the majority of the feed ration for swine. When feed costs are high, hog producers who purchase their pigs on a negotiated basis try to offset the higher feed costs by paying less for the pigs.

Although futures prices for these two key ingredients remain very high, demand and prices for feeder pigs have strengthened in the past two weeks.

A feeder pig broker in US western corn belt said demand the last few days has been "tremendous," while the number of pigs being offered for sale is declining. Lots of sows went to market during the winter, and fewer sows mean fewer pigs will be available.

Furthermore, with spring not far off, some outside finishing facilities and smaller indoor units that may have been idled for a few weeks during the winter are now beginning to be ready to take in more pigs, the broker said.

Glenn Grimes, agricultural economist at the University of Missouri, said that at times when there have been surplus feeder pigs for sale throughout the late fall and winter, prices have varied considerably on the various groups of pigs.

Grimes and others said the smaller groups, consisting of 100 to 250 head or so are harder to sell because a number of the hog producers who had been buying the pigs have exited the business this winter.

The bigger groups of pigs coming from one operation have been bringing the most money because the buyers have less risk of introducing disease into their finishing units, analysts and brokers said.