Lean Hogs Rebound From Limit Losses

Lean hog markets are up in overnight trading, rebounding from sharp losses Thursday that saw some contracts hit limit down, possibly the result of more careful consideration of just what made prices fall in the first place.

Market analysts credited Thursday’s fall to news the USDA had approved licensing of a new vaccine from Zoetis against the Porcine Epidemic Diarrhea virus.  This disease has killed millions of baby pigs in the last year, forcing producers to increase sow numbers to compensate for the losses.

A effective vaccine against the deadly virus could be a game changer in that all those extra sows are in place, producing more piglets that wouldn’t die of PEDv.

Deferred lean hog futures contracts from Feb on had the biggest losses with Feb, April and June falling the daily limit of $3.00 per cwt.

 

SKEPTICISM TAKES OVER

 

However, a healthy dose of skepticism took over after Paragon Economics and Steiner Consulting said the vaccine, while helpful, likely was not that game changer producers are looking for.

“It will help, but what we judge as pretty broad-based consensus among veterinarians and producers is that these vaccines are not likely to solve this problem,” the analysts said.

To support their assessment of the vaccine’s effectiveness, Steve Meyer and Len Steiner looked at a Reuters story that said Zoetis declined to comment on how successful the vaccine has been in reducing mortality rates in baby pigs.  Instead, the company said it had been able to “prove some efficacy” with the vaccine, a phrase that left Steiner and Meyer a little underwhelmed.

The problem is that producing an effective vaccine for a virus that hits the mucosal membranes of the intestines is extremely difficult.  Current vaccines against similar viruses are not very effective.

In the wake of those considerations, the market rebounded from Thursday’s losses and continued moving higher overnight.

 

LIGHT CASH CATTLE TRADE HIGHER

 

Cash cattle markets in the Plains traded lightly on Thursday at $158 to $160 per cwt on a live basis in Nebraska and Iowa, up $4 to $5 from last week.  This was after very light action was reported Wednesday in Iowa at $156 to $157.

There also were reports of a few trades at $250 on a dressed basis in Nebraska, although other reports had cattle feeders passing such bids, along with the $158 live bids.

A few bids were reported Thursday in Kansas at $154.

Feedlot asking prices were holding around $160 on a dressed basis as futures moved smartly higher Thursday and boxed-beef prices also traded up for the second straight day.  Cattle traded last week at $155 to $156 live and $242 to $245 dressed.

The USDA’s choice boxed-beef price Thursday was up $0.54 per cwt to $248.12, while select beef was up $0.75 at $234.69.  Choice beef was up $1.23, or 0.49%, from $246.89 a week earlier, but select was down $0.58 from $235.27 a week earlier.

The choice/select spread narrowed slightly to $13.43 from $13.64 on Wednesday.

Feeder cattle are following live cattle futures higher, reinforced by declining corn prices amid stunning yield reports from Gulf states and the Delta along with a lack of freeze warnings in Midwest weather forecasts.

Tight feeder cattle supplies also are pushing the cash market.  The CME Feeder Cattle Index for the seven days ended Wednesday was $222.91, up $1.56.