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News: 150 days from birth is the average time you need to sell your pigs for slaughter and it is about 85 kgs on average.
 
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Mustang Sally Farm
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« Reply #480 on: March 26, 2012, 11:25:25 PM »

Monday, March 26, 2012
US Swine Economics Report
US - On 30 March, USDA will release the results of their latest survey of the US swine inventory, writes Ron Plain in his Swine Economics Report.
 
Ron Plain
My estimates are that the breeding herd is 0.1 per cent smaller than a year ago; the market hog inventory is 1.9 larger; and the total herd is 1.7 per cent larger than in March 2011. My estimates of the March 1 market hog inventory by weight groups are: 180 pounds and heavier 101.0 per cent, 120-179 pounds 101.5 per cent, 50-119 pounds 102.2 per cent, and under 50 pounds 102.3 per cent of a year earlier.

December-February sow slaughter was up 2.2 per cent out of a sow herd that was 0.4 per cent larger than 12 months earlier. Our gilt slaughter data shows less gilt retention this winter than last.

Slaughter of barrows and gilts during December-February was up 2.0 per cent from a year earlier. USDA's December report implied winter slaughter would be up 1.0 per cent. USDA will probably revise upward a bit the size of the June-August pig crop, but I believe the mild weather and faster growth rates accounts for a good part of the higher-than-expected winter hog slaughter.

In their last inventory report, USDA predicted that December-February farrowings would be up 0.8 per cent and March-May farrowings would be 0.9 per cent lower than a year earlier. There is a good chance that hot weather last summer slightly reduced the size of the winter pig crop. I believe winter farrowings actually were up 0.5 per cent. I'm forecasting spring farrowings to be down 0.6 per cent and June-August farrowings down 0.5 per cent compared to last summer.

I'm estimating pigs per litter to have been up 1.8 per cent this winter. My estimate is the December-February pig crop was 102.3 per cent of a year earlier.

My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the second quarter will be 1.9 per cent above year-ago levels. I expect hog slaughter during the third quarter of 2012 to be only 0.6 per cent higher (up 2.2 per cent on a daily basis) than the number slaughtered in July-September 2011 due to one fewer slaughter day this year. Look for fourth quarter slaughter to be up 3.4 per cent (daily up 1.8 per cent) due to one extra slaughter day. I expect first quarter 2013 slaughter to be up 1.5 per cent.

I expect live hog prices to average close to $69/cwt ($91/cwt carcass) in the both the second quarter and third quarter of 2012; $63/cwt ($83/cwt carcass) in the fourth quarter of 2012; and $64/cwt ($85/cwt carcass) in the first quarter of 2013.

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« Reply #481 on: March 29, 2012, 10:22:49 AM »

Wednesday, March 28, 2012
Weekly Roberts Market Report
US - Drought in South America is seen as decreasing SA soybean output by up to 2 per cent while farmers in the US say they will plant more corn, writes Michael T. Roberts.

Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University

LEAN HOGS on the CME finished up on Monday with the exception of the nearby April ’12 contract. The APR’12LH contract closed at $84.875/cwt; down $0.150/cwt. MAY’12LH futures closed at $93.900/cwt; up $0.150/cwt. AUG’12LH futures finished $0.125/cwt higher at $93.625/cwt. A lack of fresh news as the market stabilized after losses on Friday encouraged the mixed market on Monday. The market has fallen sharply in the past month on sluggish demand and growing supplies shown in last Thursday’s cold storage report. Some pit sources consider the lean hog market oversold. Technical signs are near those levels. An oversold market is said to occur when the Relative Strength Index (RSI) is at or below 30. The RSI is a measure of market velocity. Cash hogs were reported flat to $1/cwt lower. Ample hog supplies and further declines in wholesale pork prices are weighing on cash prices. Heavier carcass weights due to excellent quality corn and unusually mild weather this winter contributed to increased pork output. Year-to-date US hog slaughter through last week was up 0.6 per cent and pork output was up 0.7 per cent from a year ago. On Monday USDA put the pork carcass value at $79.82; up $0.15/cwt but $2.47/cwt lower than a week ago. This is nearly 14.5 per cent lower than a year ago. According to HedgersEdge.com, the average packer margin was raised $1.85/hd to a negative $10.15/head based on the average buy of $60.74/cwt vs. the breakeven of $57.08/cwt. Late Monday The CME lean hog index was estimated at 85.77; down 0.78; and 2.21 lower than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’12 contract closed at $6.360/bu; down 8.5¢/bu. The DEC’12 contract closed at $5.532/bu; off 4.25¢/bu. After following soybeans higher most of the day Corn futures fell back on profit taking and some technical selling. Worries over an expected large crop and thoughts that corn plantings in the US could even go higher weighed on prices. USDA will publish the much anticipated Prospective Plantings report on Friday, March 30 and its World Agriculture Supply Demand Estimates (WASDE) and Crop Production reports on April 10. Large speculators increased net-bull positions to 311,712 contracts. Exports were bearish with USDA putting corn-inspected-for-export at 22.216 mi bu vs. trade estimates for 28-33 mi bu. Corn producers should consider pricing up to 50 per cent of the 2013 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The MAY’12 contract closed at $13.794/bu; up 13.75¢/bu. NOV’12 futures closed at $13.294/bu; up 7.0¢/bu. Soybeans reached fresh six-month highs on concerns of a smaller South American crop and expectations for small growth in US soybean plantings. Drought in South America is seen as decreasing SA soybean output by up to 2 per cent while farmers in the US say they will plant more corn. Exports were bullish with USDA putting soybeans-inspected-for-export at 24.913 mi bu vs. trade estimates of 20-29 mi bu. This is well ahead of the 13.2 mi bu needed to stay on pace with USDA’s 1.275 bi bu demand projection. Expectations for greater Chinese demand for US soybeans are also driving the futures rally. Basis for US soybeans at export terminals strengthened in anticipation of increased sales to China. Farm selling has slowed. Some spillover pressure from corn trimmed gains near the close. The carry in the May-to-July futures spread weakened representing a bullish commercial outlook. New-crop inverses continue to strengthen, indicating a longer-term bullish commercial outlook. Technically, the short-term trend turned up after the May contract posted a new high. Now is a very good time to price up to 40-50 per cent of the 2012 crop.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAy’12 contract closed at $6.594/bu; up 5.25¢/bu. JULY’12 wheat futures finished at $6.702/bu; up 5.75¢/bu. Wheat futures were supported by concerns for dry weather in Europe’s wheat belt and the risk of frost damage to the US winter wheat crop. Follow-through non-commercial short covering also supported the rally. Exports were bearish with USDA putting wheat-inspected-for-export at 15.358 mi bu vs. trade estimates for 23-28 mi bu. Export inspections were below the 15.4 mi bu needed to stay on track with USDA’s 1.0 bi bu projection. European wheat millings were up 1.5 per cent for the week ending March 23, 2012. Considering the weakening underpinnings now would be a very good time to sell up to 35 per cent of the 2012 crop.

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« Reply #482 on: March 31, 2012, 09:31:57 AM »

Thursday, March 29, 2012
CME: Hog Inventories Expected to be Higher
US - The USDA Quarterly Hogs and Pigs report will be released on Friday at 3 PM EST and analysts expect overall inventories to be higher than the previous year, write Steve Meyer and Len Steiner.


The inventory of Hogs and Pigs as of March 1 is expected to be 1.7% higher than the previous year. If this increase materializes, it would represent an overall inventory of 64.766 million head, some 1.08 million head higher than the previous year but still shy of the all time record for this quarter, 67.2 million head in 2008. The size of the breeding herd is normally a key indicator in the report as market participants pay close attention to any effort by producers to expand operations.

In recent years, much of the increase in US pork production has come through productivity gains (more pigs per litter) and heavier hog carcass weights. Analysts expect the breeding herd to be up by 0.3% compared to the previous year, which calculates to an overall sow inventory of 5.805 million head. This implies only a very modest increase from the December count, which pegged the sow herd at 5.803 million head and 17,000 head larger than a year ago. These are very modest increases despite reports of generally positive producer margins. With corn prices expected to ease from the highs of last year, the expectation is for producers to slowly add a few more sows. Still there is plenty of uncertainty about the state of pork demand, especially export demand. Also, producers will likely wait to get a better sense of how the corn crop develops this year before making any significant commitments. The US pork industry has become increasingly dependent on exports for growth, they account for almost 22% of all pork produced, and with this reliance also comes a much greater degree of risk.

While modest, the higher breeding herd coupled with ongoing productivity improvements should boost the supply of pigs coming to market later this year and in 2013. Q4 supplies remain of particular concern, if not this year more likely in 2013. The survey of analysts indicated that they expect sow farrowings during Mar - May and Jun - Aug to be up 0.2% and 0.3%, respectively, in line with the growth in the sow herd. So far, pigs per litter have been growing at about 2%. The attached chart shows the growing gap between the number of sow farrowings, which have been about steady since late 2009 and the pig crop, which this year is expected to surpass the all time record levels of 2007. Even if we were to assume a pig per litter growth of around 1.6-1.7% in Mar - May and Jun - Aug, it would still translate into a pig crop of 1.8%, or about 29.7 million head, the highest ever.




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« Reply #483 on: March 31, 2012, 11:31:34 PM »

USDA Quarterly Hogs and Pigs Report - March 2012
The latest quarterly Hogs and Pigs report from the USDA's National Agricultural Statistics Service (NASS).

Introduction
USDA Quarterly Report: March 2012
What It All Means - Expert Commentary
In the News - What the Media Says
Graph Data from the Report
Hog Inventories by State (external link - select State and navigate to file)
For a PRINTABLE VERSION of the full 16-page report in PDF format, including all the tabular data that is not shown in this article, please click here

USDA Quarterly Pigs and Hogs Report: March 2012

United States Hog Inventory up 2 Percent
United States inventory of all hogs and pigs on March 1, 2012 was 64.9 million head. This was up 2 percent from March 1, 2011, but down 2 percent from December 1, 2011.

Breeding inventory, at 5.82 million head, was up 1 percent from last year, and up slightly from the previous quarter.

Market hog inventory, at 59.1 million head, was up 2 percent from last year, but down 2 percent from last quarter.

The December 2011-February 2012 pig crop, at 28.7 million head, was up 3 percent from 2011. Sows farrowing during this period totaled 2.88 million head, up 1 percent from 2011. The sows farrowed during this quarter represented 50 percent of the breeding herd. The average pigs saved per litter was a record high 9.97 for the December-February period, compared to 9.80 last year. Pigs saved per litter by size of operation ranged from 7.30 for operations with 1-99 hogs and pigs to 10.00 for operations with more than 5,000 hogs and pigs.

Quarterly Hogs and Pigs Inventory –
United States: March 1

United States hog producers intend to have 2.89 million sows farrow during the March-May 2012 quarter, down 1 percent from the actual farrowings during the same period in 2011, and down 1 percent from 2010. Intended farrowings for June-August 2012, at 2.88 million sows, are down 2 percent from 2011, and down 2 percent from 2010.

The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 47 percent of the total United States hog inventory, up from 46 percent last year.

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« Reply #484 on: April 03, 2012, 09:52:11 AM »

Monday, April 02, 2012
CME: Hog & Pigs Inventory up 1.9 Per Cent
US - In the latest USDA Hogs and Pigs Inventory survey, the total inventory at 64.872 million head was up 1.9% from the previous year, write Steve Meyer and Len Steiner.


Hogs & Pigs Update:
On page 2 we have included a summary of the latest USDA Hogs and Pigs Inventory survey. The report had something for both bulls and bears. The total inventory at 64.872 million head was up 1.9% from the previous year, compared to pre-report estimates looking for a 1.7% increase. The sow herd was 5.820 million head, 0.6% higher than last year Probably one of the more bearish indicators in the report was the pig crop during Dec—February, up 2.9% from a year ago. While pigs per litter were in line with expectations, up 1.7% from year before, sow farrowings during the quarter rose 1.2% compared to trade estimates of a 0.7% increase. The survey indicated that producers do not expect to increase farrowings in the next two quarters, a somewhat dubious proposition given the larger sow herd. High feed costs and eroding product prices may cause producers to put the foot on the brake and projections of farrowings well below estimates for the next two quarters could be construed as bullish for the market. Still, futures may opt to focus on the reality of larger supplies today rather than promises of slower growth in the future.

LFTB Impact:
As we noted in our Friday letter, cattle futures remain on the defensive. One particularly troubling indicator is the weakness in the price of fat beef trimmings. We estimate that 50CL beef trim accounts as much as 10% of total beef on the carcass (using USDA cutting yields and taking the highest volume possible for each primal). In addition, packers generate another 5-10% as extra fat trim and a good portion of this supply went into making LFTB and related products as well as into rendering. We have seen a lot of estimates as to the supply of LFTB coming to market. Steiner estimates overall production at around 400 million pounds a year. Other estimates peg this supply at 500 million pounds a year. The conversion rate of extra fat trim to LFTB is generally 3:1, i.e. it takes three pounds of fat trim to generate one pound of LFTB. If 75% of the production capacity of LFTB is lost due to the controversy, and this is a big if at the moment, it would imply an additional 900 MM pounds of extra fat trimmings available. Some of this product will go into the 50CL supply or traded as extra fatty trim to be blended with leaner product and eventually become ground beef. A large portion will go back into rendering and trade at a discount to what it sold for in the past.

So how does this affect live cattle? Back in January and early February, before the heavy weights became apparent and before the controversy over LFTB, analysts were estimating fat beef trim prices for April and May at around $120/cwt. On Friday, 50CL beef was quoted at 73 cents/lb. This kind of difference translates in about $3.2/cwt. per head live. While we do not have prices for extra fat trim, it is fair to say that prices for this product are down sharply as well. Traders have been discounting cattle futures based in part on the fact that trim values are weak and could stay weak. The removal of LFTB implies that packers now have to sell a good portion of the fat trim generated from the carcass at much lower prices, thus reducing cattle values. What is a further concern for the market is that once Memorial Day is behind us, demand for fat beef trim going into hamburgers declines. With more fat trim around us and weaker demand, we could see further downward pressure in the complex, hence the sharp decline in June futures.

Another factor that is a corollary of the LFTB story is the impact it could have on consumer demand. It is always hard to speculate how consumers will respond to specific issues. We think it is fair to assume that the longer the issue percolates in the press, the more significant the impact on demand. Different from E.coli, which is an issue that is known to consumers and about which they have been educated, the LFTB issues is new and until the consumer knows more about it, their final demand is unknown or unknowable The removal of LFTB from a number of retail and foodservice operations implies the need for another source of supply that will replace it. The extra supply can be found but at significantly higher prices as some lean beef cuts will probably go in the grinder. The consumer will eventually get the supply of ground beef they need, it may cost more even if cattle are valued less.

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« Reply #485 on: April 04, 2012, 08:32:16 AM »

Tuesday, April 03, 2012
Factors Determining 2012 Pork Industry Profitability
US - A US-based agricultural economist expects feed costs and meat demand to be key factors affecting the profitability of North American pork producers during the remainder of 2012, writes Bruce Cochrane.





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. 

The USDA's March Quarterly Hogs & Pigs Report shows the number of hogs and pigs on US farms rose by two per cent from one year earlier.

Dr Ron Plain, an Agricultural Economics Professor with the University of Missouri, says US producers made about five dollars per hog last year and it looks like they'll do about the same this year.

Dr Ron Plain-University of Missouri
Feed costs, as I'm sure you know, is about two thirds of the cost of raising hogs and we've had record high corn prices here in the states lately and it looks like they're going to stay pretty expensive.

That's one huge factor.

USDA's Prospective Planting Report is looking for 95 million acres of corn to be planted this year in the states.

That'll be the most since back in the 1930s so, if that comes through, then we might see a bit of a decline in feed costs and that of course would be positive for hog industry growth.

The other thing of course is meat demand and just how readily we can move the supply of pork we're going to have this year.

It looks like maybe two per cent or so more pork will be produced in the United States this year than last year.

We set a record on pork exports in 2011 and hopefully we can continue to improve here in 2012.

The big uncertainty is domestic demand.

Historically high energy prices have not been good for meat demand and we're looking at what may be record gasoline prices in the United States this year.

If the meat demand softens we could be in a situation where the expected profits could turn into red ink.

Dr Plain notes the Canadian dollar has been at par or even stronger than the US dollar lately so which way the exchange rate goes will be a big factor for Canadian hog farms.

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« Reply #486 on: April 05, 2012, 09:03:35 AM »

Wednesday, April 04, 2012
CME: Hog Weights Near Record; No Sign of Decline
US - There is an ongoing, active debate in the hog/pork sector regarding the status of current hog supplies and the implications that may have to supplies for at least the next six months, write Steve Meyer and Len Steiner.


At the heart of the debate is the impact of disease and weather on hog numbers in general and the number of market-ready hogs in recent weeks in particular. First, let’s review the pertinent facts. Hog slaughter has fallen well short of levels implied by the December Hogs and Pigs report in all but two weeks since January 1.

This is obvious in the chart below which shows weekly hog slaughter for 2012 as implied by the original December numbers and the numbers from last Friday’s March quarterly report. Actual YTD slaughter has been 2.5% lower than the December data’s predicted level.

Friday’s report implies very little change to weekly slaughter totals versus the December report. The only real differences between the numbers are for March — where actual slaughter still came in below the level implied by USDA’s 180-pound and over inventory — and for a few weeks in September. Based on actual Q1 slaughter, the March forecasts give an annual FI slaughter of 110.326 million head where the December report implied slaughter of 111.057 million head. And virtually all of the difference is, so far, in Q1.

Hog weights are near record large and not declining in their normal seasonal manner. The bottom chart at right shows average carcass weights for the barrows and gilts whose prices are reported to USDA under the mandatory price reporting (MPR) system. These are top barrows and gilts only. We suspect there are NO light-weight of “off” hogs in it since the smaller plants that usually process those animals are not covered by MPR, but we do not know that for sure. We feel very confident in saying that hardly any “off” hogs are included in this average, so it is usually a good gauge of the currentness of producer marketings.

The current debate is whether we are ultra-current in our marketings due to this winter’s mild weather or see marketings that are lagging due to lower packer margins and a resulting lack of enthusiasm to run plants at full capacity. The “ultra-current” argument is based on anecdotal evidence that rates of gain have been excellent this winter. That is a bit surprising since we thought modern confinement systems had removed outside temperature as a key variable in performance. Big snow events still have an impact by causing logistical problems that can result in some out-of-feed events that slow performance. We thought lower winter temps would primarily impact financial performance through reduced propane costs, not through improved gains since barns would have been warm anyway. But the data say different, we hear. Counter-seasonally high weights support this “rapid gain” position.

But if hogs are indeed growing faster this winter, why have slaughter numbers been LOWER than expected? Higher-than-normal growth rates should mean MORE hogs coming to market, not fewer. And that is especially true if weights are increasing, implying that we are not getting them slaughtered quickly enough.

The “backing them up” argument would point to higher weights and lower slaughter as evidence that packers have reduced harvests due to this year’s lower margins. But how does one explain strong hog prices relative to the cutout value? Wouldn’t packers have aggressively reduced hog bids to keep margins more solid if pigs were coming to market faster than expected? Packer margins were close to historic levels until mid-March but even those margins were $20/head lower than one year earlier.

One obvious conclusion is simply that the 50 to179 lb. inventories in the December report were high. What about < 50? Intentions? And there is more. The dip in market weights seen in July 2011 was due to last summer’s six weeks of extreme heat. We understand that that heat wave caused some significant breeding problems that led to fewer-than-expected litters in November and December.

Those lower pig numbers should hit in late April. Will the declines be larger than “normal” as shown in the top chart? Finally, were PRRS (porcine respiratory and reproductive syndrome) death losses larger, as many believe at present, than their normal level? If so, numbers could get tighter than indicated here in June and July.

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« Reply #487 on: April 06, 2012, 09:19:26 AM »

Thursday, April 05, 2012
NAHMS Swine 2012 Study
US - In July 2012, the USDA’s National Animal Health Monitoring System (NAHMS), in collaboration with the National Agricultural Statistics Service (NASS), will begin the Swine 2012 study.
 

This national study will take an in-depth look at swine operations in the United States and provide the industry with an update of information last collected during the NAHMS Swine 2006 study.

Study focus
NAHMS worked with an array of stakeholders to define the most critical information gaps to be addressed in the upcoming study. Six objectives were identified.

Describe current US swine production practices including general management practices, housing practices, productivity, disease prevention, and mortality for five phases of production: gestation, farrowing, nursery, grow/finish, and wean-to-finish.


Describe trends in swine health and management practices.


Describe antibiotic usage patterns in pigs postweaning to market to control and treat disease and promote growth.


Evaluate presence of or exposure to select pathogens and characterize isolated organisms from biological specimens (feces, sera, feed).


Update estimates of the economic cost of select respiratory, neurologic, gastrointestinal, systemic, and foodborne pathogens found in commercial swine herds and create estimates of the economic cost of different treatment approaches.

Study activities for participants with 100 or more pigs
Participants with an inventory of 100 or more pigs in 13 States (see map above) will be asked to provide important health management and productivity information to characterize management practices in the swine industry. Fecal, blood, and other biological specimens will be collected for analysis on a subset of operations. Data collection will begin in July 2012.

Representatives from NASS will visit or telephone randomly selected swine operations to complete a questionnaire.


NASS will identify producers interested in the next phase of the NAHMS Swine 2012 study administered by APHIS.


Beginning in September 2012, interested producers will be contacted by APHIS personnel for a follow-up interview.


Biological specimens will be collected on a subset of operations. Fecal samples will be evaluated for the presence of enteric bacteria that are considered to be foodborne pathogens. Blood samples will be tested for evidence of host exposure to selected swine pathogens.
Study activities for participants with fewer than 100 pigs
Participants on operations with an inventory of fewer than 100 pigs in 31 States (AL, AR, AZ, CA, CO, FL, GA, HI, IA, IL, IN, KS, LA, MI, MN, MO, MS, NC, NE, NJ, NM, NY, OH, OK, PA, SC, SD, TN, TX, WA, and WI) will be asked to provide important health management information about their operations. Data collection will begin in July 2012.

NASS will mail a short questionnaire tailored to smaller operations and, if necessary, follow up by telephone to assist in completing that questionnaire.

Benefits to the US pork industry from the Swine 2012 study
In-depth reports and information sheets will provide a national snapshot of current management, health, and productivity of the US swine herd.


Laboratory test results for biological specimens collected during the study will be returned to participating producers, such as PRRS results for serum collected from sows and finishers or Salmonella results from fecal samples.


Serum aliquots will be added to the serum bank (established in 1990) and made available to address emerging diseases or to elucidate the epidemiology of endemic diseases.


Objective data on antibiotic usage patterns in pigs postweaning to market will inform those engaged in the national debate on the use of antibiotics in swine.


Broad geographic representation of the health status of US pigs (e.g., concerning toxoplasmosis and trichinellosis) will be used to facilitate trade and enhance the US position in international markets.


Scientifically valid estimates of productivity will be used to assess the economic impact of PRRS on the swine industry.


National estimates spanning nearly 25 years will help assess changes in swine management, health, and productivity.

Foodborne pathogens isolated on-farm will be characterized, including isolation rates, serotypes, and resistance patterns for enteric pathogens.
A scientific approach
NAHMS collects and reports accurate and useful information on animal health and management in the United States. Since 1990, NAHMS has developed national estimates on disease prevalence and other factors related to the health of US beef cattle, sheep, goat, dairy cattle, swine, equine, poultry, and catfish populations. The science-based results produced by NAHMS have proven to be of considerable value to the US livestock, poultry, and aquaculture industries as well as to other animal health stakeholders. NAHMS studies are

National in scope,
Science based,
Statistically valid,
Collaborative,
Voluntary, and
Confidential.
Confidentiality
Because NAHMS studies rely on voluntary participation, the privacy of every participant is protected. Only those collecting the data know the identity of the respondent. No name or contact information will be associated with individual data, and no data will be reported in a way that could reveal the identity of a participant. Data are presented only in an aggregate manner.

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« Reply #488 on: April 11, 2012, 09:38:28 AM »

Tuesday, April 10, 2012
CME: Pork Packer Margins Down
US - Our April 4 discussion about pig flows and the debate over whether pigs have been backed up due to low packer margins or pulled forward due to exceptional performance still rings true, write Steve Meyer and Len Steiner.


That debate is ongoing and still not completely resolved. But the numbers I included in that discussion were wrong. Spreadsheets are wonderful things are they not? They can also make an absolute fool of you and that is what befell me today when I realized that the historical data on which my slaughter forecasts were based were one year older than they were supposed to be. Duh. So, if you have been scratching your head and wondering just what Meyer was talking about, I apologize for the hair loss and time loss if any was, in fact, lost over the issue. Let’s consider the correct numbers, shall we?

The chart at below shows actual weekly slaughter for 2012 to-date (those data were correct in the original chart) and predicted weekly slaughter totals for 2012 based on the December and March quarterly Hogs and Pigs reports from USDA. It is clear that both predicted slaughter series are much closer to actual slaughter this year than was depicted in last week’s chart. In fact, about the only number that one can quibble with much is the December report’s slight over-estimation of hog numbers since January 1. And that 1.2% discrepancy between the predicted and actual numbers is hardly cause for alarm and could well be explained by excellent performance this winter. When data back to December 1 are considered, the December report was remarkably close, overestimating total slaughter for Dec-Feb by only 0.2%. And the March report has performed even better so far, missing actual slaughter from March 1 to April 7 by just 0.1% to the low side.

Using correct data, the argument for pulling some hogs forward is much more plausible. But the slaughter and weight data really suggest that hogs have moved to market at a relatively normal pace and have simply arrived at plants heavier due to exceptional performance this winter. If feed efficiencies are as good as growth rates, average costs for this winter’s hog supply are likely lower than normal, suggesting slightly higher profit margins. Now if I can ever trust my spreadsheets again!! My apologies for any confusion I may have caused.

And just how bad have pork packer margins been? As can be seen in the chart below, pork “meat margins”, the difference between the proceeds of selling the standard pork carcass and the cost of the animal, were RECORD LOW at -$14/head two weeks ago. They have rebounded a bit since then but remain near $10 in the red. Packers’ saving grace has been the value of by-products such as organ meats, head products, hair and blood. The per-head value of these very items has been over $20 for well over a year now and shows no sign of declining. As you might expect, these items are very dependent on ethic markets at home and exports markets. China and Mexico account for over 75% of U.S. variety meat exports in terms of both volume and value.

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« Reply #489 on: April 12, 2012, 08:09:54 AM »

Tuesday, April 10, 2012
Pork Commentary: USDA March 1 Report was Bullish
US - Last week we wrote, after the USDA March Hogs and Pig Report, that "we are still of the opinion $1.00 lean hogs will be reached this summer." It’s interesting how one’s view can be so much different than others, writes Jim Long.

Jim Long is President &
CEO of Genesus Genetics.
John Harrington, DTN AgDayta livestock analyst, called the March Report "Bearish." Look for futures to respond in terms of bear spreading when trade resumes on Monday, with traders pressuring summer contracts...

As usual opinions vary but when the dust settled at the end of last week, June lean hog futures had jumped $3.50 a lb since the report was released ($7.50 per head). All other months had similar increases. Bottom Line: The report was not bearish. The market saw supply at a manageable level with the main driven being demand vis a vis Pork Domestic and Export Demand (latest date has exports at historically high levels) chicken supply (down), beef supply (down). Less total meat coupled with increased demand will always be more bullish then bearish.

Breeding Herd – Hog to Corn Ratio
The USDA March 1 Hogs and Pigs Report indicated 17,000 more breeding animals in the three months from December. A sign of true expansion, this in the face of corn prices at $6.50 a bushel. Hog to corn ratios in March was 10 to 1, with the exception of the disastrous months between January 2008 and January 2009, where the average ratio was below 10, this is the lowest calculation since the debacle of 1998.

What we are seeing is two solitudes. One solitude; is those who grow corn and feed their pig’s $6.50 corn,$0.90 lean hogs, and increasing land value works for cash flow and the balance sheet despite the 10 to 1 corn ration. The second solitude; those who buy corn, raise hogs and own little land, (More than half of US production). A 10 to 1 hog to corn ratio doesn’t work for this group. Cash flow and balance sheets are not going in the right direction with a 10 to 1.

Historically a hog to corn ratio below 15 to 1, would usually lead to breeding herd liquidation. The numbers are different now especially when growers of corn have huge margin over cost of production. Not sure what this truly all means. We expect in some way, over the next few months, higher hog prices will improve the hog to corn ratio and will support the margins of hog producers who buy corn.

Corn
Next couple of weeks will be interesting. It appears that early spring and subsequent higher ground temperatures have most every corn farmer ready to unleash their corn planters. If we have rapid plantings this could pressure corn lower. The earlier corn is planted, the higher likelihood of more acres and higher yields. We all are survivors in the commodity business. We all know prices go up and down. Corn prices will fall, it’s inevitable. When? As it’s said, "is the billion dollar question."

Chickens
US egg sets and chick placements are running 5% lower than a year ago. Around 10 million less chickens a week. Less chickens supports hog prices.

Cattle
US cattle marketing year to date are 4.8 per cent lower than last year (-430,000). This lower trend is expected to continue for the balance of 2012. Less beef is bullish for hogs.

Seasonality
In the coming weeks, the seasonal drop in hog numbers will be upon us. Packers will continue to chase hogs to keep their lines full, maintain market share and shelf space while filling good margin export orders. Volatility will continue, not only the swine market but grains will probably swing like a teeter totter. Close your eyes keep driving and pray for rain.


Author: Jim Long, President & CEO, Genesus Genetics 
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« Reply #490 on: April 13, 2012, 10:26:37 AM »

Thursday, April 12, 2012
Weekly Roberts Market Report
US - Profit taking and a stronger US dollar weighed on soybean prices, writes Michael T. Roberts.

Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University

LEAN HOGS on the CME finished up on Monday with the exception of the two nearby contracts. The APR’12LH contract closed at $84.425/cwt; down $0.075/cwt and $0.300/cwt lower than last Monday. MAY’12LH futures closed at $94.000/cwt; off $0.225/cwt but $0.50/cwt higher than this time last week. AUG’12LH futures finished $0.350/cwt higher at $94.200/cwt and $1.200/cwt over last report. Lean hogs traded in choppy waters as early strength succumbed to long selling amid weakness in outside markets. Early strength gave into long exits tied to weakness in outside markets and overriding concerns about the strength of pork demand. Even though outside markets pressured hog prices late in the session short-covering pulled futures out on the positive side. Speculators with oil cash continue to watch for signs of consumer behavior change from beef to pork. That is the bet right now. USDA put the pork carcass cutout at $78.54/cwt, up $0.39/cwt but $1.41/cwt lower than a week ago. Cash hogs were $1/cwt higher with tops around $55-$58/cwt on a live basis. Negative packer margins remain a concern for traders. Processing for Monday, April 9 was placed at 274,000 vs. 416,000 last week and 402,000 a year ago. According to HedgersEdge.com, the average packer margin was lowered $9.85/hd to a negative $15.00/head based on the average buy of $61.66/cwt vs. the breakeven of $56.24/cwt. The latest CME lean hog index was estimated at 82.62; down 0.05; and 0.66 lower than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’12 contract closed at $6.412/bu; off 11.0¢/bu and 9.75¢/bu lower than last Monday’s close. The DEC’12 contract closed at $5.502/bu; even with last Friday’s close but 5.25¢/bu higher than last report. Traders were squaring positions and taking profits ahead of the World Agriculture Supply Demand Estimate (WASDE) report due out tomorrow morning at 8:30 am. The March planting report showed farmers planting the largest US corn crop since 1937. Traders expect the report to show tight old-crop supplies, however, USDA report surprises in the past have made traders gun-shy on taking big chances ahead of the report. Exports were not supportive. USDA put corn-inspected-for-export at 23.364 mi bu vs. estimates for 28-34 mi bu. However, 17.2 mi bu were needed to stay on track with USDA’s 1.7 bi bu demand projection. Ukraine announced China bought corn and wheat from them. This is significant in that it is the first time China has imported corn from the Eastern European nation. US cash corn basis levels remain firm amid slow supply movements as farmers plant spring corn. Grain buyers say heavy selling in recent weeks ahead of planting has provided adequate inventories. Corn growers should again seriously consider selling all old crop supplies at these prices; pricing up to 50-60 per cent of the 2012 crop; and 10 per cent of the 2013 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with deferreds up and nearbys decreasing. The MAY’12 contract closed at $14.310/bu; down 3.0¢/bu but 10.0¢/bu over last report. NOV’12 futures closed at $13.200/bu; up 0.5¢/bu but 65.25¢/bu lower than a week ago. Traders evened positions ahead of tomorrow’s WASDE report pressuring nearby prices. Profit taking and a stronger US dollar weighed on prices but solid commercial buying tied to strong demand offset that pressure. Exports were strong with USDA putting soybeans-inspected-for-export at 26.396 mi bu vs. estimates for 23-28 mi bu. This was nearly double the amount needed to stay on pace with USDA’s 1.275 bi bu demand projection. Look for follow-through buying interest emerging in the near-term. Traders in the pits indicate they believe the soybean market is particularly vulnerable to a downward price correction. Producers should consider selling all old crop soybeans at this time while getting to 40 per cent sold in the 2012 crop and 20 per cent sold in the 2013.

WHEAT futures in Chicago (CBOT) closed up on Monday with the exception of the May 2013 contract. The MAy’12 contract closed at $6.430/bu; up 4.5¢/bu but 14.0¢/bu lower than this time last Monday. JULY’12 wheat futures finished at $6.490/bu; up 2.75¢/bu but 20.5¢/bu lower than a week ago. Concerns of the state of the US economy, mainly from the poor jobs report issued Friday didn’t slow down bullish trading today. Some short-covering ahead of the WASDE report was supportive. Wheat prices are not expected to lead a rally though as domestic and global supplies are still ample, even if USDA lowers US wheat ending stocks. Commercial buying was noted. Exports were steady-to-bullish with USDA putting wheat-inspected-for-export at 17.605 mi bu vs. estimates for 13-20 m bu. However, exports fell further behind the pace needed to meet USDA’s demand projections of 1.0 bi bu. More than 34 mi bu in exports was needed this week to meet that pace.

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« Reply #491 on: April 17, 2012, 09:40:04 AM »

Monday, April 16, 2012
USDA Raises Prediction for 2012 Pork Production
US - US pork exports during February totalled 455.323 million pounds, up 17.5 per cent from a year ago, writes Ron Plain.
 
Ron Plain
Japan purchased slightly less pork than a year ago, but each of our other major foreign buyers purchased more US pork than in February 2011. During the first two months of 2012, pork exports were up 26.5 per cent compared to January-February 2011. February pork imports totaled 67.539 million pounds, up 11.8 per cent from a year ago. All of the net increase came from Canada. Pork imports during the first two months of this year were up 7.2 per cent from last year.

USDA's April price and production update had a lower barrow and gilt price forecast for 2012. USDA is now predicting hog prices will average somewhere around $63.50/cwt of live weight this year. That is $1.50 below their March forecast and $2.61 below last year's record average price.

USDA raised their prediction of 2012 pork production by 30 million pounds, increased expected pork imports by 20 million pounds, and raised their forecast of pork exports by 100 million pounds. That combination leaves 50 million pounds less pork on the US market. USDA raised their estimate of competing meat supply, which appears to be the reason for the lower hog price forecast.

Hog prices ended this week generally steady to lower from the previous week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $79.67/cwt, down $1.84 from last Friday. The eastern corn belt averaged $79.66/cwt this morning. Neither the western corn belt nor Iowa-Minnesota had enough hog sales this morning for a price quote. Peoria and Zumbrota each had a top of $54/cwt today. The top for interior Missouri live hogs was $59.75/cwt, up 75 cents from the previous Friday.

Following 7 weeks of decline, the pork cutout value was higher this week. USDA's Thursday afternoon calculated cutout value was $78.82/cwt, up 67 cents from the previous Thursday. Hams were lower this week. Bellies, butts and loins were higher. Packer margins remain tight. The national average hog carcass price this morning is 1.1 per cent above the pork cutout value.

Hog slaughter totaled 2.044 million head this week, down 3.8 per cent from the week before, but up 0.8 per cent compared to the same week last year. Barrow and gilt carcass weights for the week ending March 31 averaged 206 pounds, unchanged from the week before and unchanged from a year ago. The average barrow and gilt live weight in Iowa-Minnesota last week was 276.1 pounds, down 1.2 pounds from a week earlier, up 3.0 pounds from a year ago, and above a year earlier for the 20th consecutive week.

The May, June and July lean hog futures contracts each closed down the $3 limit on Friday. Friday's close for the April lean hog futures contract, $82.75/cwt, was down $1.75 from the previous Friday. The May lean hog futures contract settled at $90.12/cwt, down $4.10 for the week. June hogs ended the week at $90.22 and July settled at $90.52/cwt.

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« Reply #492 on: April 18, 2012, 09:58:01 AM »

Tuesday, April 17, 2012
CME: Lean Hog Futures Continue to Slide
US - Lean hog futures continued their slide on Monday following disappointing wholesale pork prices and the recognition that the market may be running out of time for mounting a major spring rally, write Steve Meyer and Len Steiner.


Nearby futures declined 150 points from the Friday close and they are currently priced at $88.5/cwt., about $10/cwt. lower than where they were in early March. The slide in futures has mirrored the softer tone in the domestic pork market.

The pork cutout was quoted last night at $77.85/cwt., $18.6/ cwt. or 19% lower than where it was at the same time last year. To say pork prices are soft would be an understatement.

The pork cutout is currently below 2010 prices but more worrying for futures is what happens in the next three to four weeks (see top chart). Normally hog futures rally into May as retailers and foodservice operators gear up for the start of the grilling season. And yet, here we are on April 17 and the pork cutout is lower today than it was two weeks ago.

When looking at the wholesale pork market, it helps to see where the boat is leaking and what improvements to expect going deeper into spring. The belly market continues to be an issue. It is something we have brought up before (DLR 3/2) but it bears repeating. Last night USDA quoted the belly cutout at $96.46/cwt., down some $51/cwt. or 35% from a year ago. It is important to note that belly prices last year were particularly high and one could argue that belly values are returning to a more normal trading pattern. Last year, belly prices were inflated by very strong demand from S. Korea (remember that the Koreans even waived the import entry fee due to domestic shortages).

Big foodservice promotions and active freezer inventory builds further added to the upward pressure. Today, it appears the situation has reversed. Exports appear to have eased to trend levels and foodservice promos do not seem to be a factor. As demand for bellies has pulled back (cf. spring 2011) the market is forced to absorb a larger supply. The latest inventory survey indicated a pig crop for Dec - Feb that was 1.2% larger than the previous year and the inventory of market hogs under 50 pounds on March 1 was 2.5% higher than a year ago.

Belly values have come under pressure and $8 of the $18 decline in the pork cutout value is due to the lower belly prices. This from an item that yields only 16% of the overall carcass. As for other items showing significant weakness: hams and trimmings. The ham market is weak despite strong export numbers to Mexico.

Deli business appear to be just fair and with the economy improving, maybe people are not brown-bagging as much as they used to. Trim values are very weak and this tends to affect most primals since it is a credit. LFTB may have been an issue but, in this writer’s mind, the primary contributor is the sharp increase in hog carcass weights, which are currently 2 pounds higher than a year ago and some 6 pounds higher than in 2010. Keep an eye on hog weights going into the summer, they were a primary market driver last year and will likely be again this year.

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« Reply #493 on: April 19, 2012, 07:28:01 AM »

Wednesday, April 18, 2012
March 2012 Hog and Pig Report Summary
US - 30 March was a very busy day for USDA reports with a crop plantings report and a hog and pig report released on the same day, writes Shane Ellis.

 
Most analysts were expecting the hog inventories to be up slightly from a year ago with the evidence that a controlled expansion continues in the industry. Those expectations were more than satisfied as hog numbers started to rise with the report of a 1.9 per cent increase in market hog numbers and slightly more than half of a per cent increase in breeding swine numbers. Nationally there are 64 million head of swine of which 5.8 million head are for breeding and 59 million head destined for market. The table below summarizes the report of swine inventories nationally and in Iowa.


Iowa market swine numbers increased by a considerable 4.6 per cent while the state’s breeding numbers declined by almost 2 per cent. There are now 17.9 million head of market hogs in the state. Importation of feeder pigs from other states continues to increase as Iowa maintains its status as the location with the lowest cost of grow-finish weight gain. The state’s sow inventory continues to decline as the advantages of using resources to grow and finish hogs outweigh those of farrowing sows.

Pork production is expected to up almost 2 per cent during the year. Market hog numbers are up 2 per cent and lean hog carcass weights have been very consistent with those of a year ago. The current inventory of light weight market hogs will result in a notable increase in pork supplies during the late spring and summer months. Farrowing intentions are down for the second and third quarters of this year. So while the number of litters will be down during the middle half of the year, the continued increase in litter size is expected to offset a portion of that decline in farrowings. While in February expectations were that hog prices would be robustly stronger than a year ago, producers may have already seen tight enough margins and a decline in consumer confidence to tail back on their farrowing intentions for the next couple quarters. That may turn out to be adventitious to the market, as futures prices for lean hogs began slide lower throughout March on declining beef prices and softer red meat demand. Table 2 contains a summary of the expected per cent change in pork supplies and the forecasted lean hog price in the next four quarters. Compared to the forecasted prices from the ISU forecasting model the futures market was perhaps a little bearish for the rest of the year.

 

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« Reply #494 on: April 24, 2012, 06:47:02 AM »

Monday, April 23, 2012
Global Pork Production Expanding
US - World pork production is expanding. USDA's Foreign Agriculture Service is predicting that this year's world pork production will be up 2.7 per cent from 2011, writes Ron Plain.
 
Ron Plain
Several of our key foreign markets are showing growth in their hog numbers. China, the third largest buyer of US pork last year, is expected to increase its pork production by 4.0 per cent this year. Pork production in South Korea, last year's number five foreign customer, is expected to be up 17 per cent. Increased foreign production could hurt US pork exports. Last year we exported a record 22.8 per cent of our pork production. Given the weak US economy, strong exports are crucial to hog prices.

Calculated domestic pork demand during February was up 0.6 per cent compared to a year earlier. Export demand for US pork was up 1.6 per cent in February. Packer demand for hogs was 1.6 per cent higher this February than last.

Retail pork prices in March averaged $3.49 per pound, down half of a penny from February, but up 13.3 cents from March 2011.

The average live price for 51-52 per cent lean hogs in March was $61.86/cwt, down $2.08 from February and 77 cents lower than in March 2011.

Hog prices ended this week mostly steady with the previous Friday. The national average negotiated carcass price for direct delivered hogs on the morning report today was $79.39/cwt, down 28 cents from last Friday. The eastern corn belt averaged $79.23/cwt this morning. The western corn belt averaged $80.70/cwt. Iowa-Minnesota had an average price of $80.66 on the morning report. Peoria topped at $55 and Zumbrota a top of $54/cwt today. The top for interior Missouri live hogs Friday was $58/cwt, down $1.25 from the previous Friday.

The pork cutout value was lower this week. USDA's Thursday afternoon calculated cutout value was $77.46/cwt, down $1.36 from the previous Thursday. Hams were higher this week. Bellies, butts and loins were lower. Packer margins remain tight. The national average hog carcass price this morning is 2.5 per cent above the pork cutout value.

Hog slaughter totaled 2.084 million head this week, up 2.0 per cent from the week before and up 1.2 per cent compared to the same week last year. Barrow and gilt carcass weights for the week ending April 7 averaged 206 pounds, unchanged from the week before and up one pound from a year ago. The average barrow and gilt live weight in Iowa-Minnesota last week was 276.4 pounds, up 0.3 pounds from a week earlier, up 4.2 pounds from a year ago, and above a year earlier for the 21st consecutive week.

Friday's close for the May lean hog futures contract was $87.50/cwt, down $2.62 from the previous Friday. The June lean hog futures contract settled at $87.40/cwt, down $2.82 for the week. July hogs ended the week at $87.95 and August settled at $88.50/cwt.

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