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Mustang Sally Farm

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Re: American Hog News USDA
« Reply #555 on: December 01, 2013, 04:49:29 AM »

Pork Commentary: Snapshot US Industry
26 November 2013


Jim Long is President &
CEO of Genesus Genetics.


US - Nothing like a few months (seemed forever) to get a huge correction in the swine economic equation, writes Jim Long.

The huge drop in feed costs have decreased cost of production by $30 per head. This is now reflected in the price of early weans and feeder pigs. The $30 in lower feed cost has gone directly to the sellers of small pigs.



It appears at current feed prices, lean hog futures and good production the next twelve months will give farrow to finish operations a profit of $30-35 per head. The profitability is needed, Iowa State University estimates returns for farrow to finish per head had losses between $20-50 per head for ten months in a row beginning the summer of 2012 until the spring of 2013.

Price Estimates

Both the USDA and Livestock Marketing Information Center (LMIC) are projecting prices for 2014.



We expect lean hog prices will average above the USDA estimate for 2014. We see no indications that prices before September 2014 will be any lower than 2013. We believe the lack of breeding herd expansion and the continued losses from PED will keep hog supplies very close to 2013 levels.

Red Meat Production (Billion lb.)



The USDA is estimating US Beef Production will decrease 1.45 billion lbs. in 2014. That’s a huge decline. The USDA is projecting pork production to increase in 2014. That’s a huge decline. The USDA is projecting pork production to increase in 2014. We are not convinced this will happen to the extent they are projecting. The USDA projects 2013 will produce about 130 million lbs. more pork in 2013 than 2012. As of mid-November, actual ytd US pork production is about 200 million lbs. lower than 2012 (1.2 per cent). That’s 330 million lb. spread between projections and actual YTD. We cannot comprehend that the US pork Industry next year will jump 1 billion lbs. in production as the USDA Projects.

Capita Consumption

In the 1980’s US per capita consumption of Beef was 81 lbs. In 2007 it was 62.7 lbs. In 2014 the USDA projects per capita beef consumption at 50.7 lbs. Despite recent record high beef prices the cattle industry has not been able to make money. The LMIC reports that US cattle feedlots have lost money 9 of the last ten years. No wonder beef supply is collapsing. Without profits no industry can prosper and ever sustain itself.

Pork per capita consumption is projected to the summer. 44.4 lbs. in 2014. US per capita consumption of boneless equivalent has never exceeded 50 lbs. Reality is pork per capita consumption has hovered between 43-49 lbs. for the last 100 years. We have held consumption per capita but haven’t grown. It’s a real challenge and opportunity to get demand such that our industry can grow with increased per capita consumption while still achieving sustained periods of profitability.

Summary

No doubt the tide has turned for our industry. Reasonable profitability is present and will be here at least through the summer. In our opinion the fall of 2014 still looks promising for profitability. We still Believe there has been next to no sow herd expansion, we expect pork demand both domestically and globally to stay strong. We all need a chance to make some real money.


Author: Jim Long, President & CEO, Genesus Genetics


Mustang Sally Farm

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Re: American Hog News USDA
« Reply #556 on: December 05, 2013, 11:24:58 AM »

Pork Commentary: US Pork Cutouts Remain Strong
03 December 2013


Jim Long is President &
CEO of Genesus Genetics.


US - The Thanksgiving week although great for the family is not usually good for hog producers, as the holiday shortened week leads to fewer hours that packers operate. Many a year the Thanksgiving week is the lowest hog price for the year, writes Jim Long.

National Lean hogs average $80.45 last Friday. US Pork Cut-outs averaged $89.81. The $9 spread probably indicates Packers are making decent money right now. It is good Cut-outs are almost $90 as this indicates the Pork price remains strong. As the hog marketings seasonally begin to decline and the competition from Packers to keep their lines full continues, we expect a rapid increase in lean hog prices.

The lean hog price increase we expect will be aided by the lower volume of Pork in storage. Six per cent less (-37 million lbs.) on October 31 compared to a year ago.

It’s interesting looking at the pricing of the US cut-out/primal values.



Ribs, Bellies and Butts which are definitely going to carry more marbling and/or intramuscular fat are worth more than both loins and hams. No matter how you look at it consumers are voting with their money to pay more for ribs, bellies and butts. There is demand for what we suspect is the consumer’s desire for taste and flavour. As an industry we need to recognize this as a stark reality. Less focus on lean, more on taste and flavour.

PED

PED continues to rip through the US. There will be less hogs coming. This past week’s US Cash Early Wean price average of $77.43 ($67-83.00) is a reflection of the demand for small pigs to fill holes, finishers and packing plant shackles that PED is creating. So far Canada doesn’t have PED. Can it be kept out? Maybe, but not likely.

Feed

Our current feed cost farrow to finish is $90 per head the same calculation this past July was $132. That’s $42 per head difference. Sure makes us feel smarter. Our farmer arithmetic on 2.5 million plus hogs USA-Canada a week times $40 = $100 million a week. The industry needs the capital, lots has been lost.

Mexico

The hog price in Mexico is quite strong 85¢ USD /lb. liveweight (24.67 peso per kilogram). This past week we met with a large Mexican producer. They calculate currently that they are making $59 per head. That is real good. That type of profit sure fills the equity hole that Mexican producers created in prior months.

Summary

Lowest hog price for the year is probably here. Pork Cut-outs are strong, should give us good price boost as hog numbers decline. PED running rampant. Early Wean price extremely strong pushed by demand created by PED.


Author: Jim Long, President & CEO, Genesus Genetics


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Re: American Hog News USDA
« Reply #557 on: December 06, 2013, 01:55:19 AM »
USDA Discovers Weapon to Fight FMD05 December 2013 US - Proteins called interferons are among the latest weapons US Department of Agriculture (USDA) scientists are using to combat foot-and-mouth disease (FMD). These proteins kill or stop viruses from growing and reproducing.Scientists with the Agricultural Research Service (ARS) Foreign Animal Disease Research Unit, located at the Plum Island Animal Disease Center at Orient Point, NY, have demonstrated that interferons can be used to protect animals immediately against FMD infection. This rapid protection gives vaccines time to induce the animal's immune response needed to fight the disease. Interferons consist of three families—type I (alpha-beta), type II (gamma), and type III (lambda). Retired ARS chemist Marvin Grubman discovered that type I is very effective in controlling FMD virus infection. Pigs inoculated with a viral vector containing the gene coding for swine type I interferon and challenged with FMD virus were protected for five days. To cover the seven-day window it takes for vaccines to start protecting against FMD, Dr Grubman combined type I and II in an antiviral vaccine-delivery system, which quickly blocks the virus in pigs. In combination with a vaccine, this patented technology provided thorough protection from day one until the vaccine immune response kicked in seven days later. These methods work well in pigs, but not in cattle. However, ARS microbiologist Teresa de los Santos, computational biologist James Zhu and Grubman have identified a type III interferon that rapidly protects cattle against FMD virus as early as one day after vaccination. In laboratory tests, disease was significantly delayed in animals exposed to FMD virus after previously being treated with bovine type III interferon, as compared to a control group that did not receive treatment. In other experiments, the type III interferon treatment was found to be even more protective in cows that were naturally exposed to FMD, according to Dr de los Santos. ARS is USDA's principal intramural scientific research agency, and this research supports the USDA priority of promoting international food security.

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Re: American Hog News USDA
« Reply #558 on: December 12, 2013, 12:51:16 PM »

Are We Frittering Away Profit Possibilities?
10 December 2013


US - Porcine epidemic diarrhoea virus (PEDv) is dominating the discussion in pork production circles these days and it is easy to understand why, writes Steve Meyer in his latest "Market Preview" as published in National Hog Farmer magazine.

While the number of new positive samples tested at disease diagnostic labs declined slightly in the week of November 24 (the last for which data are available), the weekly number was still the second highest on record (see Figure 1) and pre-dates the news that Nebraska has now recorded its first PEDv case. The disease is spreading steadily in Iowa and southern Minnesota and the break in Nebraska suggests that that previously unscathed state will likely see the kind of spread witnessed in other areas since May.



Demand for weaned pigs would have been high this fall even without PEDv. Lower costs would allow producers with free finishing space to pay more for pigs while still looking at what are expected to be good 2014 prices. So high-priced pigs were in the cards regardless.

But this high (See Figure 2)? Spot-market weaned pigs sold last week for an average of $79.56, another record-high in a string of record-highs that date back to mid-November, when the December 2005 record of $61.57/head was first broken. Clearly, this run-up is more than just lower costs as producers with slack space chase the available – and likely PEDv-tightened – number of weaned pigs.



Are we behaving like a bunch of cattle feeders, frittering away all possibility of profit to keep facilities filled? I don’t think so. My production costs model based on Iowa State University’s (ISU) historic costs and returns series says that, at current corn and soybean meal prices, May market hogs should cost about $156 to produce. That would put the breakeven price of a 200-lb. carcass at $78. Deducting an estimated weaned pig cost of about $42 means that the pig can be taken to market weight for $114. Add that to an $80-weaned pig and you get $194 or about $97/cwt. carcass. May futures are trading at $98.83 on Monday morning.

Those computations don’t leave much profit but they don’t involve red ink either. And the question is whether May – and following months’ – futures have incorporated these pig losses. My contacts suggest that those losses could be pushing 4 million head spread over the past 28-30 weeks. But Figure 1 suggests that the lion’s share of those losses have occurred in the past 10-12 weeks, a period that corresponds to marketings beginning in April. Lean Hogs futures prices currently suggest summer cash prices roughly the same as in 2012. Will supplies be large enough to keep prices the same as one year ago? It appears to me that the only way that might happen is for the sow herd and litter sizes to be growing very rapidly. We’ll get a read on those numbers in three weeks. Let’s hope the read is better than the one we got in September.

Mustang Sally Farm

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Re: American Hog News USDA
« Reply #559 on: December 16, 2013, 03:58:19 AM »

Pork Commentary: US PED Continues to Have Ramifications
10 December 2013

Jim Long is President &
CEO of Genesus Genetics.


US - This past week the spread of PED continued with it now in Nebraska. PED is cutting production, leading to greater demand for cash early wean and feeder pigs, according to Genesus CEO Jim Long.

This past week US Cash early weans averaged $79.56 ($69-87) while cash 40 lb. feeder pigs averaged $82.25 ($73.50-89). To contrast the cash market you only need to look at early wean prices on contract with a formula price $47.63 ($38-77.87). The average price difference of $25 is big. We expect there has been times in the past when the contract price was $25 per head higher than cash. Very volatile situation and business.

Question: At what price do early weans reach the ceiling price? When we see $87.00 as a top last week, we have a hard time figuring how they will make money with those pigs unless you figure barns at no value.

If the cash early wean price is a true reflection of market supply and demand (it is) we sure wonder how high market hogs will reach next summer. No one is bidding early weans to these high prices because they don’t want to pay that much. The reality is they have to pay it to get them. When we think about what the early wean price means about current pig supply we certainly won’t be surprised to see US market hogs reach $1.10 next summer.

Closeout Performance

Dr Tom Stein, Chief Innovations Officer, Executive Chairman and Chairman of the Board of Directors at Meta Farms (That’s a long title) recently penned an article and provided data from what Meta Farms (provides software systems to help manage livestock data) has seen on finishing pig closeouts.



As a famous New York football coach once said, "The score doesn’t lie". We look at these numbers as we see feed conversion in finishing of 2.84 not 2.5 as many in the industry crow they have, 1.77 ADG is not 2. Mortality in finishing is 4.29 per cent not 2 per cent. Facts are hard and cruel. It’s just like the number of hogs per sow per year.

As of last Saturday the USDA estimates that the US has marketed 103,907,000 hogs. There are three more marketing weeks in 2013. If we divide 103,907.000 by 49 weeks we have an average of 2,120,000 hogs marketed per week. Now take that to 52 weeks, a projected number for 2013 total 110,240,000. The USDA inventory of breeding herd in September 2012 was 5,788,000.

Canada will send about 4 million early weans and feeder pigs to the US in 2013, for farmer math sake take 3.5 million hogs from the US number to compensate for their entering the US. That take US origin market hogs down to 106,750,000 approximately; divide that by 5,788,000 breeding herd we come up with 18.44 market hogs per breeding animal per year. 18.44 average means half of industry is below that. Adjust the breeding herd 100,000 or market hogs by a million it barely moves the average.

18.44 is a fair estimated average, makes us realize why so few producers ever will share their real data with their name on it. Bell curve 18.44 and you probably have few herds over 23 hogs per breeding animal. Bottom line – our industry has lots of room for improvement. With the reality hog production is hard to be real good at.

Gilts

It will be interesting in the coming months as hog prices improve and demand for gilts increases how much PED will affect gilt availability. There already has been breaks in several gilt multiplier herds (Touch wood, no Genesus herds). When the breaks happen we suspect the industry will not accept gilts from such herds. Will they be depopulated? How short will silt supply be? Some genetic companies with gilt multiplication in concentrated areas are more prone to a break? Already gilt prices are being increased due to the purchase of Genetiporc by PIC. The effects of PED could have a long tail?

Summary

More and more as we look at cash price of early weans and feeder pigs we believe the US summer hog market could reach $1.10 lean a lb. or more. We believe it ourselves and have put several thousand more pigs on feed. Maybe we are wrong but our skin is in the game. Time for us all to make some more money.


Author: Jim Long, President & CEO, Genesus Genetics

Mustang Sally Farm

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Re: American Hog News USDA
« Reply #560 on: December 24, 2013, 07:03:32 AM »

Weekly Overview: Eight Months on and PED Virus Still Spreading in the US
23 December 2013


GLOBAL - With animal diseases spreading rapidly - notably Porcine Epidemic Diarrhoea in the US and African Swine Fever in the Russian Federation - there has never been a greater need for heightened biosecurity and innovation to control these infections and protect the global pig industry, writes Jackie Linden.

It was in mid-April this year that Porcine Epidemic Diarrhoea (PED) was first diagnosed in US pigs, since when its spread has been relentless. The virus has now been found in pigs in 20 states, with top pig-producing state, Iowa, the worst affected and accounting for half of the new positive results in the latest week. These positive results were found quite evenly distributed in pigs of different ages - suckling, nursery and grower/finisher.

The longer this virus is around, the greater its effects will be on the markets in the US and globally in 2014.

The US National Pork Board suggests heightened biosecurity and stepped-up communications are key to the containment and eradication of the PED outbreak that has spread throughout the country.

Turning to other diseases, The Pirbright Institute in the UK has been awarded £4.4 million to work with researchers from the universities of Bristol, Cambridge and Oxford as well as the Animal Health and Veterinary Laboratories Agency, The Genome Analysis Centre and an industry partner on a long-term study on the transmission of swine influenza.

US Department of Agriculture (USDA) scientists are stepping up their efforts to help fight deadly swine viruses, Classical Swine Fever and African Swine Fever, which are prevalent in other countries and pose a threat to the United States.

African swine fever continues to spread among wild boars living in sanctuaries in the Volgograd region of Russia.



Jackie Linden, Senior Editor


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Re: American Hog News USDA
« Reply #561 on: December 31, 2013, 07:29:11 AM »

Hog Outlook: USDA December Survey
30 December 2013

Ron Plain


US - USDA's December hog survey said the nation's swine breeding herd was down 1.1 per cent compared to a year ago and the market hog inventory is down 0.6 per cent, write Ron Plain and Scott Brown.

USDA said September-November farrowings were down 0.2 per cent and predict winter farrowings will be up 1.3 per cent and spring farrowings up 1.4 per cent. The market hog inventory is a bit smaller than the pre-release trade estimates, but farrowing intentions are a bit higher.

There was indication of the impact of Porcine Epidemic Diarrhoea (PED) virus with pigs per litter at 100.1 per cent of last fall. That was the smallest year-over-year increase in pigs per litter since the summer of 2003.

USDA's monthly Cold Storage report said there were 546 million pounds of frozen pork at the end of November. That was down 3.3 per cent from the month before and down 2.2 per cent from a year ago.

Testing data from the National Animal Health Laboratory Network says that as of 15 December, the PED virus has been confirmed on 1,764 swine premises in 20 states. This is an increase of 119 locations from the week before. This was the third largest weekly increase after the two previous weeks. Iowa, North Carolina and Oklahoma account for 65.5 per cent of the cases. There is an unknown amount of double counting in this data.

Hog prices were steady to $2 lower in the last week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $75.32/cwt, down $1.64 from last Friday and down $5.08 from a year ago. The eastern corn belt carcass price averaged $76.40/cwt this morning while both the western corn belt and Iowa Minnesota averaged $72.94/cwt. Peoria had a live price top this morning of $51/cwt. Zumbrota, MN topped at $52/cwt. The top price for interior Missouri live hogs Friday was $55.75/cwt, unchanged from last Friday.

Friday morning's pork cut-out value based on mandatory price reporting was $83.83/cwt FOB plants, down $3.58 from the week before, but up $2.27 from a year ago. This morning's hog prices averaged 89.8 per cent of the cutout value.

Hog slaughter this week totalled 1.843 million head, down 21.7 per cent from the week before, but up 4.5 per cent compared to the same week last year.

The average live weight of barrows and gilts in Iowa-Minnesota last week was 280.6 pounds, down 0.7 pound from a week earlier, but up 7.0 pounds from a year ago.

The February lean hog futures contract settled at $85.65/cwt today, down 60 cents from the previous Friday. April hog futures ended the week at $90.97/cwt, down 20 cents from the week before. May hogs gained 10 cents to close at $98.50. The June contract ended the week at $100.25/cwt.

March corn futures ended the week at $4.275 per bushel, down 6 cents from the week before. March soybean meal ended the week at $427.20/ton which was down $6.40 from the week before.

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Re: American Hog News USDA
« Reply #562 on: December 31, 2013, 07:30:32 AM »

Pork Commentary: Red Hot Early Wean, Feeder Pig Market
24 December 2013


Jim Long is President &
CEO of Genesus Genetics.


US - Red Hot – We have never seen anything like what’s happening. US Cash Early Wean Pigs averaged $83.65 per pig last week (73-89) while Cash 40 lb. feeder pigs averaged $90.12 (80-95.50). They just seem to be going up and up, writes Jim Long.

We expect cash feeder pigs to reach more than $100 in a few weeks. A year ago Cash Early Weans were about $55 and feeder pigs around $65. That $25-30 per pig difference year over year is all margin for small pig producers. Assuming it costs $35 to produce an early weans. There’s a $50 per head profit for a business that most of the time thinks $5 all the time is good.

The Cash Small Pig Market is a true reflection of current supply and demand. Supply is down. First because there has been no sow herd expansion, second PED is killing probably millions of small pigs creating empty finisher barns that have ongoing overhead costs.

We are all farmers and we can’t stand empty barns. Currently there are more barn spaces than pigs to fill them. It’s partially the reason slaughter weights have gone up. There are no small pigs looking for the space so might as well them a bit longer to gain weight. Do the prices for small pigs make any sense for buyers? It’s in the eye of the beholder.

Feed prices have dropped year over year $30 so that lowers finishers costs. Second markets might be real but they are not necessarily rationale. Cattle lose money most of the time but somehow there are people who want to keep doing it. Is $15,000 acre land rationale when corn costs $4.10 a bushel to produce? Lots of smart people feed cattle and are buying $15,000 an acre land. We believe cash lean hogs will reach $1.10 this summer. If we are right at the end of the day both small pig producers and finishers will make money.

Productivity


*
 "It is an immutable law in business that words are words, explanations are explanations, promises are promises – but only performance is reality"

Harold Geneen
 


Year to date the US has marketed 109.564 million market hogs. There is 11 days to go. We expect about 3 million more hogs to come this year. Takes US marketings to 111.5 million. Year to date data (December 7) shows Canada has sent 5.222 million small pigs, market hogs and sows. Take 5 million off 11.5 US market hogs the US origin hog slaughter in 2013 would be 106.5 million.

The USDA reported the US breeding herd was 5,788 in September 2012. We believe that’s a good indicator of the breeding herd size that produced US market hogs in 2013. Abracadabra 18.4 US market hogs per breeding animal per year? We repeat this as we wrote similar calculation couple weeks ago and some challenged our arithmetic.

Maybe we are wrong but we don’t think so. If it’s 18.4, how many are at 16? Makes us wonder if profit models are correct? What is profit at 18.4? No wonder there is no expansion, who can afford the capital and risk?

We have been in the business a long time. We are in the Genetic business. We always suspected a high level of overly optimistic productivity claims. It’s why Genesus uses only actual Customer records from a Calendar year to show productivity.

We want definite timelines to establish productivity. Not a months results extended to a year as some of our lame competitors do, or as they do in Europe, don’t count the sows as we do, that why their European Genetic results don’t ever seem to be as good in North America.

Red Hot Early Wean and Feeder Pig Market

We expect $1.10 lean market hogs. We believe Summer Cash will reach $1.10, we doubt if lean hog futures will. June Lean Hogs closed Friday at 100.5, so out $1.10 is out there could be wrong but t’s what we see coming. Less Beef, consumer Chicken fatigue, steady export, a stronger US economy, US population growth (more to feed), there is no way any sow herd expansion can get pigs raise for the summer market. It’s our turn to make some real money.

In the last few years hog production has been tough. It has taken a toll on many. This includes our families as worked in a business that was swallowing cash and equity. It’s Christmas and a New Year’s coming. It’s time to be thankful and optimistic. By nature we are all optimistic, we are builders we are entrepreneurs, we produce food, and our business has honour. Have a Merry Christmas and Happy 2014.


Author: Jim Long, President & CEO, Genesus Genetics

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Re: American Hog News USDA
« Reply #563 on: January 08, 2014, 10:18:26 AM »

Pork Commentary: When You Have Fewer Sows, It Means Liquidation
31 December 2013

Jim Long is President &
CEO of Genesus Genetics.


US - The latest USDA report indicates the US breeding herd down by 62,000, which means liquidation, writes Jim Long.

The average trade guess (whatever trade guess is?) of the breeding herd for 1st December was between 100.2 and 101.9 per cent higher this year compared to last. That would have meant that between 12,000 and 110,000 more year-over-year. The December 1 USDA report indicates the US breeding herd is actually 62,000 fewer, which is liquidation. Got to love the “trade guessers” saying 110,000 more; they are only out by 180,000 sows.

If you regularly read this Commentary, you know we never believed there was expansion going on. We sell breeding stock. It’s our job to know where expansion is happening. It wasn’t! We don’t see any significant new sow barns (next to zero), we know of producers quitting in the last quarter, producers have been losing money over the last couple years. Getting labour, environmental issues, animal welfare pressures, older barns, older owners, hard to get credit, with higher equity demand by lenders. All the above meant net less sows. Liquidation.

We expect profits will now be strong through 2014 as the smaller breeding herd plus Porcine Epidemic Diarrhoea (PED) losses means fewer hogs throughout 2014.

Producers need to back fill the equity crater created over the last few years. Producers know they are going to make money over the next 12 months but the “trade guessers” who expected expansion underestimated the experience and knowledge of the existing producers. They know they start expansion now there will be no market hogs before 2014. What’s the market going to be then?

Today’s producers are survivors, they have lived the pain of the hog cycle. Most producers are older and when you get older, there is more risk aversion. Few sow barns have sold at a decent price in the last five years (many used ones are still 20¢ on the dollar). Sow barns have not been a very good investment. To have more pigs you need more sows. To build a 5,000 wean-to-finish new, land, building, inventory start-up is a $10-million investment. Lots of money, you need a 10 per cent return to cover in our opinion. Need a $10 per head profit on 100,000 pigs a year. There is no recent history that can be made on a $10 million investment. That’s why they are not happening. Simple hard economics.

Bottom Line

There is no expansion. There has been liquidation. We believe lean hogs will reach $1.10 this summer. Why? Less pork, less beef, pork exports will be strong, domestic pork demand will be solid, especially with US economy gaining strength.


Author: Jim Long, President & CEO, Genesus Genetics

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Re: American Hog News USDA
« Reply #564 on: January 12, 2014, 02:41:13 AM »

Feed, Pork Supply Expected to Improve Hog Profitability
10 January 2014

Manitoba Pork Council



Farm-Scape is sponsored by
 Manitoba Pork Council and Sask Pork

 FarmScape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
 and Sask Pork.
 

US - A University of Missouri agricultural economics professor predicts lower feed costs and stable pork supplies will mean improved profits for hog producers this year.

During 2013 the price of corn in the US fell from close to seven dollars per bushel at the start of the year to about four dollars per bushel by the end of the year.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, says as feed costs declined the cost of production went down and producers went from losing money in the first half to making money in the second half.

Dr Ron Plain-University of Missouri :

Hog producers are set up to probably make some fairly good money here in 2014.

We're anticipating that feed costs are going to stay down and we expect meat production to not change much this year in total so we're looking for hog prices close to year ago levels.

With respect to profitability, history says when hog farmers make money they tend to save gilts and expand the breeding herd.

That's probably going to happen.

USDA's December inventory report found that producers expect to farrow about 1.3 per cent more sows in the first half of 2014 than a year ago and I think that's been driven by lower feed costs and a return to profitability but the other big issue, the PED virus and what it's likely to do to our herd.

We've had a number of farms break with the disease and death loss is very high in baby pigs so even though we've got farrowing trending upwards we're expecting the number of pigs produced in the United States in the coming year to be very close to what we had in 2013.

Dr Plain says, with good profit margins expected in the coming year, if you can keep your pigs healthy and growing well 2014 could be a profitable year.

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Re: American Hog News USDA
« Reply #565 on: January 21, 2014, 05:44:13 AM »

Hog Outlook: November 2013 Pork Exports Down Compared to Year Ago
20 January 2014

Ron Plain
Ron Plain


US - Pork exports during November were down 2.9 per cent compared to a year earlier due to almost no pork going to Russia. Pork imports were up 14.3 per cent in November due to more pork from Canada. In November, 22.2 per cent of US pork production was exported. Imports equaled 4.0 per cent of production, write Ron Plain and Scott Brown.

Feeder/weaner pig imports were down 16.4 per cent in November and imports of other hogs were down 15.4 per cent.

Retail pork prices in December averaged $3.761 per pound. That was down 1.5 cents from the month before, but up 33.4 cents compared to a year ago.

The average price for 51-52 per cent lean hogs was $58.16/cwt in December. That was down $2.06 from November and down $1.00 from December 2012.

With December retail pork prices above a year ago and hog prices below, the farm to retail price spread, $2.764 per pound in December, was 2.0 cents higher than in November and 35 cents higher than a year ago. Most of the year-over-year increase has been at the retail level.

Friday morning's pork cutout value based on mandatory price reporting was $86.49/cwt FOB plants, up $3.88 from the week before and up $2.61 from a year ago.

Hog prices ended the week a bit lower. The national average negotiated carcass price for direct delivered hogs on the morning report today was $75.95/cwt, down 51 cents from last Friday and down $4.40 from a year ago. There was no price quotes for the western corn belt or Iowa-Minnesota morning. The eastern corn belt averaged $75.97/cwt. Peoria had a live price top this morning of $53/cwt. Zumbrota, MN also topped at $52/cwt. The top price for interior Missouri live hogs Friday was $55/cwt, down $1.50 from last Friday. This morning's hog carcass price averaged 87.8 per cent of the cutout value.

Hog slaughter this week totaled 2.263 million head, up 9.1 per cent from the week before (which was low because of cold and snow) and up 2.6 per cent compared to the same week last year.

The average live weight of barrows and gilts in Iowa-Minnesota last week was 282.6 pounds, down 0.3 pound from a week earlier and up 6.1 pounds from a year ago. This weight series has been above year-ago every week since March 2013.

The February lean hog futures contract settled at $86.17/cwt today, up 35 cents from the previous Friday. April hog futures ended the week at $91.90/cwt, up 90 cents from the week before. May hogs gained 73 cents to close at $99.60. The June contract ended the week at $101.57/cwt. July closed at $100.20/cwt.

March corn futures ended the week at $4.24 per bushel, down 9 cents from the week before. June corn settled at $4.385/bushel.

March soybean meal futures ended the week at $434.50 per ton, up $20.90 from the previous Friday.

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Re: American Hog News USDA
« Reply #566 on: January 29, 2014, 08:33:28 AM »

PEDV Hits Canada - What Happens Next?
28 January 2014


US - The big news this week is, of course, the discovery of porcine epidemic diarrhea virus (PEDV) in Canada. The virus was confirmed last Thursday to be present in a 500-sow farrow-to-finish operation in Ontario, writes Steve Meyer in his latest "Weekly Preview" published in National Hog Farmer.

Canada also reported that two samples from a loading dock at a Quebec slaughter plant had tested positive earlier in the week. Late last week there was no apparent connection between the two incidents but there is talk this morning that they may be related.

How much will this move markets? In my opinion, no more than the discovery of the virus in a 500-sow farm in the US – and possibly not as much since the US market is far more important from a price discovery point of view. That is not to say it is insignificant. It simply doesn’t mean much to markets.

There is a lot of truck traffic between Canadian farms and assembly yards and US farms and packing plants. This was pretty much inevitable, especially considering the truck washing challenges posed by winter weather. It is likely that the Canadians will do a better job of controlling the virus than did we Americans, primarily because they have been able to learn from our experience. I certainly hope they are successful in those efforts.

One important fact is this: Canada has declared the disease "reportable" and will thus generate much more accurate, detailed and meaningful data than have their US counterparts. That’s not saying much, but contrasting what we will know in Canada with what we have known – or NOT known – in the US may prove quite interesting.

Last week’s Cold Storage Report from USDA indicated that total frozen meat and poultry inventories were at their lowest level in two years on 31 December. That’s not to say that the freezers are empty, since we have 1.938 billion pounds of frozen product on hand. But that figure is 4.1 per cent lower than last year, and 1.6 per cent lower than at the end of November. Figure 1 shows the monthly freezer stocks data for the four major species.

 



The largest year-on-year decline among the four major species was for turkey, whose stocks were nearly 20 per cent smaller than at the end of 2012. Frozen beef stocks were down nearly 6 per cent from one year ago, while chicken stocks were only fractionally (0.4 per cent) lower.

Pork inventories grew by 2 per cent during December and finished the year 1 per cent larger than one year earlier. The monthly gain was a bit of surprise as stocks frequently decline during December as holiday product moves to retail outlets and holiday-driven slaughter slowdowns reduce output and thus freezer inflow. I’m not too concerned about the increases since December production, based on weekly data for the four weeks that ended 28 December was 3.7 per cent higher than one year ago. December 2013 had one more slaughter day than did December 2012 and that extra day is included in the data cited above. One day added to nineteen would have boosted “slaughter time” by 5.3 per cent so production on an equal day basis was actually a bit lower this year.

The only cut to show a large year-on-year swing was bellies (see chart above), whose inventory grew to 80.556 million pounds, up 123 per cent from one year ago and up 67 per cent from last month. That’s the highest level since May 2005 and comes on the heels of a record run for bellies prices in 2012. This does not mean bacon and bellies demand has tanked! It does imply that bacon may have been priced out of some usage and off of some consumers’ shoping lists. And what happens then? Prices fall and inventories grow – just as they have done for bellies – and the product once again becomes attractive, pushing prices higher and drawing down inventories. I’m not worried about bellies. Bacon still makes almost anything taste better and that fact has not changed one bit!

Finally, last week’s Cattle On Feed report was generally neutral. Slightly higher placements will provide some respite for beef consumers come summer but the die is already cast for this spring: HIGH PRICES. We doubt that the market can maintain cutout values in excess of $230/cwt. just as it couldn’t keep bellies at $180. Some buyers will back off of beef. But they will likely eat some other sort of animal protein, thus strengthening pork, chicken and turkey demand.

I still see tight beef supplies for the foreseeable future, especially with better pasture conditions and a full-blown expansion of the beef cow herd underway.

 



As published in National Hog Farmer's Weekly Preview.

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Re: American Hog News USDA
« Reply #567 on: February 10, 2014, 11:00:54 AM »

Pork Commentary: Lean Hog Futures Reach New Contract Highs
04 February 2014


Jim Long is President &
CEO of Genesus Genetics.


US - Last Friday the Lean Hog Futures May-Dec 2014 reached new life of contract highs, writes Jim Long.

The Spring-Summer markets are on fire. The combination of PED ravaging the production sector and the major decline in beef supply has and will continue to push prices higher.



Will the cattle herd recover?

On Friday the USDA released the 1 January Cattle Inventory. All cattle and calves in the United States as of January1, 2014 totaled 87.7 million head, 2 percent below the 89.3 million on 1 January, (down 2.4 million head). This is the lowest 1 January inventory of cattle since the 82.1 million on hand in 1951. (63 years ago). To put in context the US population in 1951 was 154 million, 2013 – 317 million. Twice as many people.

All cows and heifers that have calved at 38.3 million, were down 1 percent from 38.5 million on 1 January 2013. This is the lowest 1 January inventory of all cows and heifers that have calved since the 36.8 head in 1941 (74 years ago). The US population in 1941 was 133 million people.

Not to beat a dead horse but it doesn’t take a rocket scientist (or ag-economist) to see the trend-line, less cattle, less beef, less per capita consumption, more expensive beef. What’s the option for red meat? Pork! Thank goodness the lame “other white meat” program has been ended. We need as an industry to continue to improve red meat pork with better marbling, taste, flavour, darker colour etc. It’s our chance to gain demand. Demand enhances profitability.

Small Pigs

US cash Early Wean and Feeder pigs are quite strong. Last week cash early weans averaged 83.10 and 40lb. feeder pigs $101.32. Quite strong is an understatement, they’re in the stratosphere.

It was pointed out to us this week that the June-Dec spread is historically high with June at 104.82 and December 80.375. It’s 24 difference or around $50 per head. Usually the June-Dec spread is about $20 per head. The same person pointed out that $80 Dec will probably mean around $40 early weans and $60 feeder pigs. If Dec stays at 80-81 the high cash small pig market will come crashing down to normal prices. We expect December futures will gain strength in coming months.

Spain

We had some visitors from Spain this past week at Genesus. 2013 was a good year for producers there. They are optimistic for the future but depend on exports within the EU and to Russia. Feed is still expensive, about 30 per cent higher than North America but market hog prices are also higher at 75¢ lb. USD liveweight.

Spain has traditionally been a very lean hog market (Pietrains) but it is interesting that demand for better meat quality is developing. Genesus has sent Durocs (meat quality champs) and it appears more are going. Like all industries better quality is always being demanded. Consumers continue to demand better phones, cars, televisions etc. Pork is no exception. The Global demand for Pork continues unabated with 44 per cent of all meat consumed. To stay on the path of enhanced demand, leaders in the industry like our visitors from Spain know that better quality is absolutely necessary.

Summary

PED causing havoc in production. Lean Hog Futures reach contract highs. A very volatile situation.


Author: Jim Long, President & CEO, Genesus Genetics

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Re: American Hog News USDA
« Reply #568 on: February 18, 2014, 01:19:52 AM »

CME: Pork Demand in Great Shape
17 February 2014
 

US - Pork demand remains in great shape. The pork cutout has held up quite well compared to year ago levels even as total pork production is running significantly above year ago levels, write Steve Meyer and Len Steiner.

This statement may come as a surprise given all the talk about the impact of PEDv virus among a growing number of US hog producers. And while hog slaughter since December 1 (last inventory report) has been for the most part flat, significantly heavier hog carcass weights have bolstered the supply of pork coming to market. Pork production last week at 463.2 million pounds was 4.6% higher than a year ago and in the last six weeks pork production has averaged 457.6 million pounds, 2.2% higher than the same period a year ago. Slaughter and production numbers will likely decline compared to the previous week, in part because of weather disruptions in the Carolinas. Hog slaughter on Wednesday was reported at 384,000 head and we expect total hog slaughter for the week will be somewhere around 2.08 million head, almost 2.8% lower than the previous year. Even with this decline, total pork production will likely be steady vs. last year thanks to hog carcass weights hovering at around 214 pounds.

Last year, average hog carcass weights were about 207 pounds. The 7 pound increase represents and additional 14.5 million pounds of pork coming to market, the equivalent of about 68,000 hogs.

So far, hog producers have been able to offset the impact of PEDv via weight increases but it is important to remember the lags between the time the virus hits a hog farm, causing producers to lose a significant number of baby pigs, and the time those pigs would have come to market. The reason why PEDv remains a critical issue for the industry is that it is spreading. For the week ending January 26, AASV reported 265 new cases. By comparison, weekly new cases in August and September (which is the time period corresponding to Jan - Feb period) were averaging about 32 new cases per week. The magnitude of the disease simply is different, which is why futures continue to maintain significant premiums for spring and summer contracts. Also a significant risk factor going forward is the ability of producers to sustain big carcass weight gains during the hot summer months. Weather remains a big wild card for hog production in July and August.

Pork prices also have benefited from sharply higher prices for beef. The chart to the right shows the overall increase in the pork cutout (+$14/cwt vs. 2013) and the relative contribution of the various primals to this increase in the cutout. The gains have been broad based but the two main contributors have been hams and loins. Both these primals benefit greatly from improvements
in retail demand. In recent days we also have seen a sharp increase in the value of pork trimmings, with 72CL pork quoted last night at 87 cents/lb., +45% higher than a year ago.

Trimmings account for a significant portion of these primals and have contributed greatly to the year/year gains. At this point it is hard to say if the big jump in trim values is related to the expected resumption of trade with Russia. Ham prices also have benefited from strong exports to Mexico, the main foreign buyer of US ham.

Export demand seasonally improves going into the spring and summer and, if pork supplies fall short, they could be one more factor pushing pork prices higher.

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Re: American Hog News USDA
« Reply #569 on: March 12, 2014, 08:31:06 AM »

Pork Commentary: Hog Market Not Hot, It’s an Inferno!
11 March 2014

Jim Long is President &
CEO of Genesus Genetics.


US - Last fall when we predicted the U.S. lean hogs would reach $1.10 (at the time summer lean hog futures were $90). We contemplated if lean hogs would reach $1.20. We thought there was a chance but to be honest we thought it was beyond crazy to think it could happen, writes Jim Long, President-CEO Genesus Inc.

Well we were wrong, we weren’t bullish enough. June closed at $120.50 last Friday. The lack of sow herd expansion, and lower beef supply all compounded by at least 5 million pigs dying of PED has to the opportunity of profits of $100 per head this summer. This is truly the Year of The Pig Farmer. It’s a red hot inferno!

The Pig Farmers that stuck it out and believed when the banker didn’t, the wife wondered, the children thought crops were more golden have the chance of a generation to bury debt and replenish equity. We salute all the survivors who hung in when there were many doubters.

Other Observations
•U.S. hog marketing’s last week were estimated a 2.072 million down 120,000 from the same week a year ago.
•U.S. cattle marketing numbers last week 548,000 down 50,000 from the same week a year ago.
•Put the cattle and hog numbers together and we end up with millions of lbs less red meat year over year. Less meat will always lead to higher prices.
•DTN –Agdayter Feeder Pig Livestock Margin calculates you can pay $113 for a 45 lb. pig marketed in July.
•Last Thursday 53 – 54% U.S. lean hogs were $102.97 a lb. A year ago $76.41. Almost $60 more per head year over year.
•Last week’s U.S.D.A. cash early wean price was $88.87 and 40 lb. feeder pigs $114.03 (very close to the $113 DTN calculates can be paid).

Travel

This coming week we will be in Denmark, Germany, and Italy. We will write some observations in the next commentary.

Choice Genetics USA Bankruptcy

The Choice Genetics LLC USA bankruptcy continues with $21.8 million in debts, with $14 million due to unsecured creditors, and $486,000 in assets. Where this shakes out is anyone’s guess but it’s hard to spin this as a small blip and business as usual. We are aware of producers taking other roads for genetic supply. Why wouldn’t they – a bankrupt company? Warranties? Service? Supply? Genetic Development? It will be interesting to see if Group Grimaud the French owners of Choice Genetics will make good to the U.S. creditors or put up a white flag?

Hog Market

We are not sure there is much further upside to the summer market. Already we are at the highest prices in history. One of the downsides (if there is) of this market is the margin calls producers who have hedged more had to cower. We expect there has been $10’s of millions in margin calls. Some leaders have been quite aggressive in pushing producers to hedge, hopefully they will continue to finance the strategy they encouraged and to some extent mandated.

Sow herd expansion we think has not happened to a great extent. Some empty sow units are being restocked in USA – Canada. We guess 20 – 30,000 sows in this group. We do not believe many more sow units are being built. PED has had all of the top 25 largest producers in the U.S. This in itself has created a significant amount of time and energy to manage. It is a crisis scenario. A scenario that doesn’t lead to real expansion.


Author: Jim Long, President & CEO, Genesus Genetics

 

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