There has been a dramatic decline in the percent of Negotiated pigs based on daily slaughter information. We have seen articles written about the need for increased negotiated pigs from industry experts such as Glenn Grimes, Ron Plain and Steve Meyer to name a few.
WHY IS IT MY PROBLEM
The need is for better price discovery for all other pigs that are based on contracts using some sort of variation of weighted average from one of the USDA cash reports. The problem is that the weighted average calculated based on the pigs that have been negotiated. The U.S. used to have over 10% of the daily kill listed as negotiated pigs and that figure was pretty consistent. We are now below 5% pretty consistently. We need to take action as an industry.
All though the USDA releases cash reports at 11:00 am CST and 3 pm CST, the reporting isn’t always accurate compared to what is actually going on in the countryside. There are times when cash sales have been made within our network that were done prior to the release of the 11:00 am report but yet it doesn’t show up. Sometimes it is because of the timing of the sale and other times it is just doesn’t get reported in time I guess. The packer, like any other business will try to buy their needs as cheap as they can. If the 11:00 am reports come out lower then it puts out a negative vibe to negotiators in hopes of buying their remaining needs at a cheaper price. If the outside markets are extremely low on the day it also allows the packers to try and piggy back (no pun) off of the negativity to start with lower bids.
In my opinion the industry needs producers to band together and share cash/demand information with one another. You may negotiate pigs or you may have a contract, it never hurts to know what is going on within your business. How will we ever get a large group of people to consistently share information with one another without any major effort? The area of technology has advanced so much in recent years and almost everyone has mobile phone. We have started a Cash Hog Information Network using Twitter. If you aren’t familiar with Twitter, it is a “social network” that can be used to get small bits of information from people you choose to get it from. The information can be sent directly to your cell phone as a text message or you can just read it online at the end of the day, it is your choice.
In order for our idea to become a solution we need to have more information flow. If you negotiate pigs we need your help as well as we can provide you with our information. You have three choices, 1) call us at 605-310-3986 with your sale information and we will send it to the network. 2) Call our cash hog hotline at 605-221-1948 which goes directly to a voicemail for those that don’t want to talk to anyone. 3) ADVANCED—tweet your cash sale from your twitter account and we will send it out to the network.
WHAT IS THE COST
NOTHING other than a texting plan with your mobile phone company. There is no fee for receiving being a part of the network, nor is there a payment for sharing information. The idea is that everyone benefits from good and timely information.
HOW DOES IT WORK
We don’t need any detailed information other than the following, price sold, packer and delivery time frame. If your sale is higher than what we’ve already posted then we will post your sale on twitter (we don’t use producer or packer names) as a general sale which will then be sent to all of the people in our network. When we post a “tweet” (cell phone display to left), which is a message no longer than 140 characters, on twitter the small message will automatically be sent to anyone who has signed up to receive it. Your twitter account is like an email inbox which collects all of the up to 140 character messages of the people that you “follow”. You choose which people, if any, that you would like to get messages sent to your cell phone as a text message. We believe that cash information is something that can be utilized throughout the day therefore we suggest getting it on your cell phone as a text.
WHAT IS OUR GOAL
We are not trying to get the entire country to switch over to negotiating pigs. We are trying to get back toward the 10% of daily slaughter number. According to industry experts, 10% is a sufficient enough supply of negotiated pigs for fair price discovery. If you negotiate pigs already then great, we hope you join the network and strengthen it. If you have contracts but are thinking about negotiating some pigs then join the network to receive information until you can contribute. We will not try to coordinate sales as a group or anything of the sort, we just share information. A producer’s tie to the network is strictly communication based.
HOW DO I GET STARTED
If you want to see what type of information is posted to the network, you can visit www.markethogs.com which will bring you to my twitter page. All of my “tweets” are listed there. This will give you an idea of what to expect from us should you join the network. In order to get real-time information as it is posted you will need to have a cell phone with a texting plan. You will also need to have a twitter account so you can “follow” us and get the networks information. You DO NOT HAVE TO TEXT other than one initial text to setup the account. If you don’t know how to set up a twitter account you can call us and we can assist you in the process.
WILL THE NETWORK GUIDE MY NEGOTIATIONS
No. There will be no suggestions on what price to ask for negotiated pigs. We will only publish sales that have taken place for the day and from there producers can decide what to seek for prices. We are not trying to gang up on packers here; we are trying to share information that is of benefit to all of us industry wide.
HOW GOOD IS THE INFORMATION
There are no guarantees to the accuracy of the information. There is nothing stopping someone from reporting false prices. There are several negotiators in the network that are arguably some of the best in the nation if not the best. If we get information that is way out of line and we can’t confirm it we will not put it out. If there are sales being reported that we are skeptical of we will need to build a relationship with the producer reporting the information to ensure good information flow. There may be some bumps but since starting earlier in 2011 with this idea we have yet to have any major issues.
Questions, comments or ideas about any of the above information please feel free to contact us.
Jeremy Knutson — firstname.lastname@example.org
Phone — 877-212-2564 or 605-310-3986
Cash Hog Hotline — 605-221-1948
Websites — www.markethogs.com, www.leanhog.net, www.hurleyandassociates.com
TWITTER — sign up for a twitter account at www.twitter.com