American Hog News USDA

[mikey]

Friday, January 16, 2009Print This Page
Pork Exports Continue to Exceed 2007 Pace
US - Red meat exports continued their strong pace through November, with pork up 20 per cent and beef up nine per cent (including variety meat) compared to November 2007.

 

For the first 11 months of 2008, pork and pork variety meat exports were 61 per cent larger than 2007, nearing the 2 million metric ton mark (1,898,698 metric tons or 4.18 billion pounds). 2008 pork exports through 11 months were valued at $4.5 billion, an increase of 59 per cent.

“Global protein supplies remain tight, with the exception of a few situations in key countries where stocks of imported red meat are weighing on the market, specifically in Korea and China,” said Erin Daley, US Meat Export Federation (USMEF) economist. “As currencies and prices stabilize, inventories will decline and demand for US red meat will likely continue at a relatively strong level. Although pork exports are not expected to maintain the stunning pace of 2008, they are forecast to exceed 2007 volumes,” Daley said.

“The bottom line is that, regardless of the global economic situation, people have to eat,” said Daley. “US beef and pork prices are lower than they were during the summer, which helps offset the increased strength of the US of the dollar.”

Despite the slowing of global trade in all products, pork exports from the major suppliers, the European Union (EU), the US and Canada, remained fairly steady from September through November. Pork exports from Brazil, however, declined by 50 per cent in November, and its beef exports fell 35 per cent compared to November 2007. Reduced exports to Russia and Hong Kong account for most of the decline. Australia’s beef exports remained strong from September through November, largely due to an increase in exports to the United States, with US import demand stimulated by the strengthening US dollar.

Pork Exports
For the first 11 months of the year, exports of pork and pork variety meat accounted for nearly 25 per cent of production, with export value equating to $43 per head slaughtered compared to less than $30 per head during the same period in 2007, Daley said.

“Pork remains a very affordable protein, and our exports continue to defy projections,” said Daley.

Mexico was the top pork export market in November, reaching another new record at 41,402 metric tons (91.3 million pounds), up 50 per cent from November 2007. January through November exports to Mexico increased 40 per cent to 348,458 metric tons (768.2 million pounds) valued at $614.2 million.

Japan was the second-largest market in November with exports at 40,354 metric tons (88.9 million pounds), up 22 per cent. January through November, Japan was still the largest destination for US pork, with exports were up 27 per cent to 417,986 metric tons (921.5 million pounds) valued at $1.43 billion. Although the strong yen has unique implications for pork exports, due to the gate price system, exports are expected to remain strong in 2009 especially as the US is the dominant supplier of chilled pork.

The China/Hong Kong region was the third-largest market for US pork in November, with exports totaling 19,469 metric tons (42.9 million pounds), primarily to Hong Kong. Muscle cuts accounted for 8,747 metric tons (19.3 million pounds). November exports to this region were the smallest monthly volume since December 2007 and were 17 per cent lower than November 2007. Still, Daley noted that January through November exports were up 148 per cent, totaling 377,431 metric tons (832.1 million pounds) valued at $652.6 million. Large supplies of imported pork are weighing on the market, compounded with the increase in Chinese production. Although it is difficult to predict the pace of exports to the region in 2009, US pork will benefit from the wide exposure to the product during the massive shipments in 2008.

November exports to Russia were off 8 per cent from November 2007, totaling 14,613 metric tons or 32.2 million pounds (muscle cuts accounted for 8,840 metric tons or 19.5 million pounds). January through November exports to Russia were up 141 per cent and totaled 214,960 metric tons (473.9 million pounds) including 148,552 metric tons (327.5 million pounds) of muscle cuts valued at $469.3 million. In 2008, muscle cut exports to Russia exceeded the US tariff rate quota (TRQ) of 49,800 metric tons (109.8 million pounds) by more than 100,000 metric tons (220.5 million pounds). In other words, more than 100,000 metric tons of US pork entered Russia subject at a duty of 60 per cent.

As recently reported by USMEF, the US TRQ for pork exports to Russia increased to 100,000 metric tons ( 220.5 million pounds) for 2009, which will be beneficial, especially considering oil priced at approximately $40/barrel and the global economic situation. It may be difficult to export large volumes of pork outside the TRQ this year, so a doubling of the quota size was critically important, Daley noted.

Pork exports to Canada set a new monthly record in November at 17,474 metric tons (38.5 million pounds), up 8 per cent from November 2007. January through November exports were up 17 per cent totaling 157,146 metric tons (346.4 million pounds) valued at $514.27 million.

“Exports were surprisingly strong considering the weakening of the Canadian dollar and the slowing of live hog exports to the US (imports of Canadian slaughter hogs were down 38 per cent during 2008),” said Daley. “Hopefully the revisions to COOL in the recently published rule will result in more favorable trade with Canada and Mexico.”

Exports to South Korea were steady at 10,712 metric tons (23.6 million pounds), putting the January through November total up 42 per cent to 122,997 metric tons (271.2 million pounds) valued at $262.9 million. Pork exports to Korea should remain strong, as an affordable protein with a positive image.


Other Pork Export Markets
ASEAN region – exports up 173 per cent to 4,361 metric tons (9.6 million pounds) in November. January through November total at 54,840 metric tons (120.9 million pounds), an increase of 328 per cent. The Philippines, Vietnam and Singapore are the largest markets. Recent exports to Vietnam have declined dramatically due to large supplies and low prices in China, but exports to the Philippines and Singapore remain significantly larger than historical levels.
European Union – up 127 per cent to 4,584 metric tons (10.1 million pounds) in November. January through November totals up 146 per cent to 44,764 metric tons (98.7 million pounds).
Australia – up 64 per cent in November, totaling 3,123 metric tons (6.9 pounds) with a January through November increase of 36 per cent to 38,176 metric tons (84.2 million pounds). Exports to New Zealand were up 17 per cent, totaling 6,040 metric tons (13.3 million pounds) through November.
Central and South America – up 30 per cent to 5,001 metric tons (11 million pounds) with exports up 22 per cent through November, totaling 36,465 metric tons (80.4 million pounds). Honduras is the largest market, followed by Colombia and Guatemala.
Caribbean (excluding the Dominican Republic) – up 77 per cent to 3,025 metric tons (6.7 million pounds) in November with exports up 21 per cent through November, totaling 18,228 (40.2 million pounds).
Dominican Republic – up 103 per cent to 1,127 metric tons (2.5 million pounds) in November, putting the January through November total at 12,453 metric tons (27.5 million pounds), up 158 per cent.
Taiwan – up 89 per cent through November, totaling 28,735 metric tons (63.3 million pounds).

[mikey]

Tuesday, January 27, 2009Print This Page
Meat Processing Giant Reports $198 Million Loss
US - The world's largest meat processing company Tyson Foods made an operating loss for the first quarter of the 2009 financial year of $198 million.



The loss was on increased sales of $6.521 billion compared to $6.476 billion for the same period last year when the company made a profit of $94 million.

The major losses were in the chicken sector where the company said it reflected the increased grain costs of $183 million and increased net losses of $197 million from the company's commodity risk management activities related to grain purchases, as compared to the same quarter last year.

Chicken segment sales were $2.2 billion and operating loss was $286 million in the first quarter of the 2009 financial year.

Sales and operating results were impacted positively by higher average sales prices and increased sales volumes, primarily due to our foreign operations.

Operating results were also adversely impacted by an increase in net losses of $18 million from our commodity risk management activities related to energy purchases, as compared to the same period of the 2008 financial year. These net losses exclude the impact from related physical purchase transactions, which will impact future period operating results. Operating results also included a non-cash inventory adjustment for a lower-of-cost-or-market valuation allowance of $20 million.

Beef segment sales were $2.7 billion and operating results were break even in the first quarter of the 2009 financial year.

Operating results were positively impacted by increased average sales prices and lower average live prices, partially offset by a decrease in sales volume.

Operating results were positively impacted by net gains of $41 million from our commodity risk management activities related to forward futures contracts for live cattle as compared to the same period of fiscal 2008. This amount excludes the impact from related physical purchase and sale transactions, which will impact future period operating results.

Pork segment sales were $878 million and operating income was $55 million in the first quarter of the 2009 year financial.

Operating results were impacted positively by increased average sales prices, offset by higher average live prices and decreased sales volume.

Operating results were negatively impacted by a decrease in net gains of $20 million from our commodity risk management activities related to forward futures contracts for live hogs as compared to the same period of fiscal 2008. This amount excludes the impact from related physical purchase and sale transactions, which will impact future period operating results.

Prepared Foods segment sales were $746 million and operating income was $35 million in the quarter.

Operating results were impacted positively by higher average sales prices and increased sales volumes, offset by higher raw material costs.

“I’m honored to lead this great company once again as we work aggressively to return our chicken business to profitability and best-in-class performance,” said Leland Tollett, interim president and CEO of Tyson Foods.

“While the first quarter of fiscal 2009 was clearly challenging, our chicken segment fundamentals are improving. Product values are up, and our input costs are down. When our demand began a noticeable decline, we reduced production by approximately 5% in early December. We also remain intensely focused on improvements in such areas as product mix, yields and efficiencies.”

Mr Tollett indicated the outlook for Tyson’s Beef, Pork and Prepared Foods segments, as well as international trade and renewable products initiatives, remains positive.

“We’ve experienced improvements in beef market conditions since December,” Mr Tollett said.

“Pork margins are expected to remain above normalized levels, and we believe our Prepared Foods business will continue to experience solid returns because of the demand for processed meats such as pizza toppings, hams, bacon and lunch meat.”

Mr Tollett expressed optimism about the direction of Tyson International, as well as the company’s Renewable Products division.

“I’m excited about the progress of our new poultry initiatives in South America, China and India,” Mr Tollett said.

“I’m also pleased that construction is underway for the Dynamic Fuels plant in Louisiana, which will convert animal fat and greases into renewable diesel and jet fuel. I am confident these new endeavors will generate shareholder value in the future.”

[mikey]

Friday, January 30, 2009Print This Page
2009 to be a Rough Year, Say UGA Farm Economists
US - University of Georgia economic experts at the 2009 Ag Forecast in Gainesville, Georgia, used no flattering words to describe the current or future economic outlook for the US and Georgia’s agriculture sector, still staggering from major blows received last year.


“It’s certainly a year filled with the most uncertainty that I can think of,” said John McKissick, director of the UGA Center for Agribusiness and Economic Development. “Unfortunately, it really is a horrid situation. As we look through most of 2009, we still have a rough patch to go yet.”

UGA predictions say the recession could last through the fourth quarter of 2009, making it the longest since the Great Depression.

Production decreases
For the first time in a long while, farmers will reduce production for what is called the meat complex, which includes beef, pork and poultry.

Beef cattle producers will continue to liquidate their herds. Their cost of production has increased from 80 cents per pound to $1.20 per pound. Milk prices will be down from record high prices last year, he said.

“The crop choices don’t look good at all, partly because of price expectations but mostly because of continued high cost of production,” Mr McKissick said. “So the potential crop profit situation has completely changed from 2008.”

Mr McKissick predicts a bidding war between corn and soybeans for limited farm acreage again in 2009 with soybeans winning out. In Georgia, soybeans will likely gain acreage. Peanut, corn and wheat acreage will go down.

“There is a lot out there that will and can influence the bottom line,” he said. “We can never dwell too much on food quality and safety, and its impact on demand. We see over and over again what that can do to an industry and consumer demand.”

Trade increases
As the world’s population increases, the “percent of agricultural products in the world that move through international trade is going to grow, is growing, especially value-added commodities,” said Octavio Ramirez, head of the UGA College of Agricultural and Environmental Sciences Department of Agricultural and Applied Economics.

Historical markets for US farm commodities are shrinking, Mr Ramirez said. Population decline in higher-income areas like Europe, Japan and Russia will lead to lower demand there.

“Where the growth is going to be is in low-income countries,” he said.

By 2050, populations in high-income countries will increase only 2 per cent. Low-income countries will boom by 46 per cent, adding 2.5 billion consumers in mostly Africa and Asia. Other population growth will occur in Latin America and the US. Europe’s population will decline.

“How many people currently in low-income countries that are lifted out of poverty will be the most significant factor affecting trade in the future,” Mr Ramirez said.

The US is in a good situation when it comes to feeding and clothing the world. Much of the world’s quality soil is in Canada and the US, where yields are high and water is available.

“People have been talking about how we’re going to run out of food for a long time, for 50 to 60 years,” he added. “Ag research has actually increased productivity faster than demand growth.”

Innovation needed
But the US needs to continue to innovate, he said, creating technologies to increase yields and producers’ profits. There are bright spots, Mr McKissick said. Crude oil prices have dropped. After topping out at $140 a barrel, prices plummeted to $40 a barrel. This is good news for producers who saw much of their 2007 and 2008 earnings go to fuel costs. Fuel prices will move up over time, he said, but without dramatic increases.

The US dollar has strengthened. This isn’t good news for US exports because it makes them more expensive. But it is good for imports.

“There are a lot of challenges out there. But there are also reasons for us to be optimistic,” Mr McKissick said to sum up the forecast.

[mikey]

Wednesday, February 04, 2009Print This Page
NFU President Testifies on Market Speculation
US - National Farmers Union President Tom Buis appeared before the House Agriculture Committee in support of increased oversight and transparency of the commodities markets.


Mr Buis, citing last year’s record high commodity prices, followed by a historic collapse in the grain, livestock and dairy prices, said unabated speculative commodity futures trading is increasing market volatility.

“Speculators created a market bubble and false sense that higher prices were here to stay and as a result producers locked in higher priced input and feed costs. The economic collapse and bursting bubble have jeopardized the economic livelihoods of many Americans and is rippling throughout our rural communities,” Mr Buis said.

Mr Buis commended the committee’s commitment to addressing market speculation and increase transparency and called for passage of the Derivatives Markets Transparency and Accountability Act (DMTAA) of 2009.

“This legislation will increase transparency in the commodity markets, allowing for an open process that will keep the public apprised of those involved in commodity markets,” Mr Buis said. “The Commodity Futures Trading Commission will finally have the necessary tools to ensure markets remain open, fair and transparent.”

Buis commended the legislation’s requirements for transparency when considering prospective over-the-counter (OTC) transactions and requirements for the CFTC to study and report on the effects of potential position limits within OTC trading.

“This information will enhance the public’s confidence that markets are not being manipulated, fraudulently exploited or overwhelmed by speculation. And if so, corrective action can be launched,” Mr Buis said.

[mikey]

Thursday, February 05, 2009Print This Page
Piglet Feed Supplements Support Immune Systems
US - As feed costs rise and the production of ethanol from corn grain increases, swine producers have ramped up their search for new feed supplements for younger swine.



According to studies by Agricultural Research Service (ARS) scientists, feeding dried distiller's grains (DDGS) to piglets can give their immune systems an extra boost.



Research leader Brian Kerr evaluates piglets’ ability to use nutrients in corn coproducts for growth and development. After 4 weeks of a diet supplemented with dried distiller’s grains with solubles (DDGS), the immune response of piglets increased. (Image source: ARS)The US ethanol industry generates an estimated 10-14 million metric tons of DDGS annually from the milling of corn grain that yields fermentable sugars for conversion into fuel alcohol. The majority of DDGS are fed to beef and dairy cattle.

But livestock producers also use DDGS to supplement the diet of older pigs. So Tom Weber, a physiologist at the ARS Swine Odor and Manure Management Research Unit in Ames, Iowa, partnered with research leader Brian Kerr and microbiologist Cherie Ziemer to study the effects of feeding DDGS to young pigs.

For their research on piglets, the team divided weanling pigs into four groups and fed them either a standard control diet or diets supplemented with DDGS, soybean hulls or citrus pulp. After one week, the researchers observed an increase in cytokine expression in the pigs’ small intestine, which they linked to DDGS consumption.

Cytokines are chemical messengers that are essential for proper immune function.

This response reinforced findings of previous DDGS studies showing that pigs consuming diets supplemented with DDGS exhibited reduced levels of ileitis, a common inflammation of the small intestine.

Kerr and others have found that adult pigs can be fed with a corn and soy-meal feed that is up to 40 percent DDGS. However, piglets are given feed with a maximum DDG content of 7.5 per cent, because their growth may be reduced when they consume too much fiber.

[mikey]

Thursday, February 05, 2009Print This Page
Pork Plant Lays off 600
US - A US pork processing plant has laid off 600 of its staff because of crippling cash flow problems.



According to a report in the News-Gazette, Meadowbrook Farms, a farmers cooperative in Illinois is facing losses of between $4 million and $5 million following a default on a contract.

The cooperative, owned by 100 farmers, is pulling out all the stops and has called in help from the USDA, private lenders and the village of Rantoul to restart the plant.

The company is hoping the USDA can provide a loan guarantee to get things up and running again.

The problems revolve around debts from Triad Food Group in Chicago and Meadowbrook Farms has filed a complaint against the company in the local circuit court.

Meadowbrook provided anti-biotic-free pork to Triad.

[mikey]

 
China imported 1.925 million tonnes of US pork in 2008
[05 February 2009] According to US Meat Export Federation China (and Hong Kong) imported 1.925 million tonnes of pork and pork products last year, including 1.161 million tonnes of pork variety meats and 764,000 tonnes of pork cuts and to become the largest export market for US pork. The imports, though huge, represents less than 5% of China’s total consumption. 

[mikey]

Friday, February 06, 2009Print This Page
Hog Producers Could Break Even in 2009
US - A prominent livestock economist expects at least some short term improvement for pork producers this summer despite the fact that most of them continue to see a lot of red ink.



According to American agricultural news source, Brownfield, Iowa State University Extension Economist John Lawrence says hog producers could break even in 2009, "[producers are] still in the red ink now...it looks like the summer will be profitable, but unfortunately back to break even or lower in the fall."

So what can a producer do to keep the losses from cutting too deep? Aside from trying to protect their profit margins, Prof. Lawrence says one big thing producers can do is have "at least" a 60 day supply of feed on hand, "While I don't think we'll repeat last summer's $7 corn, I wouldn't be surprised to see some volatility in that market. I'd like to have a supply I control, that I can go to when the prices are quite high."

Prof. Lawrence adds that another key factor will be export demand and the performance of the dollar against the currencies of our big pork importers.

[mikey]

Saturday, February 07, 2009Print This Page
Market Preview: Questions to Answer Before Expanding
US - Weekly US Market Preview provided by Steve R. Meyer, Ph.D., Paragon Economics, Inc.



A few weeks ago, a banker friend called and asked for some advice. He has a client in the heart of the Corn Belt with 300 sows, farrow-to-finish, who was contemplating a move to 600 sows. But the producer was concerned that there was no place at all for small producers in the future. He wanted to know what I thought. Having given it considerable thought, I decided to share my comments with North American Preview readers.

First, as I said, this producer is in the heart of the Corn Belt. He can arbitrage DDGS vs. corn when prices allow it. He is within easy transport distance of five slaughter plants owned by four different firms. By his banker’s account, it is a really good, well-run, 300-sow operation. All of those are important background to the questions and answers that follow:

Can he compete on a cost/cwt. basis – with all hog production costs covered? This implicitly means that he has records that accurately tell him what these costs are. It also means paying market price for his corn, paying for full shares of the tractors, telephone, pickup, labor, etc. The critical concept is “all”. Many smaller producers are diversified and they don't put enough costs against the livestock business.


Can he deliver a high percentage of full-value pigs? This is a concept championed in recent years by independent economist Dennis DiPietre and others who challenge our assumptions about some “natural” number of tail-enders and dropouts, and the optimum weight at which we sell market hogs. It is even more critical now, given the amount of capital it takes to get a hog to market weight. With so much money invested, we can hardly afford to take less than full value for any animal. Accomplishing this goal takes tremendous attention to detail. A 600-sow operation may not have any one person who can or will accept that responsibility.


Are his hogs and his relationship with one or more packers good enough that he will have a place to sell 12,000 pigs per year? That is a pretty small number by today's standards, but it is still a lot of hogs even to Tyson, Farmland or Swift. I would think he could secure a formula hog contract to guarantee 70-80 per cent of his hogs’ shackle space as long as the hogs are good and he isn't a jerk to work with. Packers, like most people, don't like to do business with jerks, regardless of how valuable that business may be.


Does he have a competitive advantage vs. a specialized pork producer? If this producer has some grain production, it is definitely a competitive advantage. He can live off his grain revenue (while still paying full price for corn for his hog operation) if grain goes high and hogs do not. Specialized companies can't do that. If we have another year like last year, those companies may be in a bind unless they do some very good risk management. Some succeeded and some failed on that count in 2008. Raising a good portion of your own corn may be an acceptable strategy to handle this risk.


Does he have the ability and time to manage risk effectively by forward pricing feed and hogs when it is called for? The big boys have someone whose sole job is to buy feed ingredients and sell hogs. It is difficult to match them on this point, but I think it is a pretty important question. An option is to sit down and define some pricing objectives for both feed ingredients and hogs, then hand this function over to someone who does it full time. This can be handled by someone completely outside of the operation. I think a lot of producers would be better off if they took this approach. They won't win 100 per cent of the time but, over the long haul, they'll gain from having a person focused on the subject and removed from the emotional connections.


Finally, is there anywhere else to invest the money that he is considering investing in the expansion that would earn a higher rate of return than he has been making in hogs? That is a basic investment question, but one that many farmers never ask themselves. Equities are very low right now and it may be a better, safer play to buy a good mix of diversified mutual funds. He's probably talking some pretty good coin for the purchase and any remodeling that needs to be done. With the equity market price-to-earnings ratio at a very low level, I find it hard to argue against investing there. And, he can do chores sitting at a computer indoors where it is 72°, year 'round.
I think this producer must answer "yes" to numbers 1 through 3 to proceed. He would be better off if he can say "yes" to #4 and #5, as well, since both reduce risk. If he says "yes" to #6, the hog deal is off, I suppose, but he still needs to answer that question. He may be far better off diversifying away from agriculture and this could be a great time to do it.

The outlook for the economy is still very negative, but farmers need to expand their idea of diversification. Corn, beans and hogs are diversification to a small degree. Corn, beans, hogs, small-cap growth stocks, large-cap income stocks and emerging market stocks is diversification on steroids – at least by the standards of most farmers.

 



As published in National Hog Farmer's Weekly North American Preview.

[mikey]

Saturday, February 07, 2009Print This Page
Weekly Review: Need for Hog Herd Reduction
US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

 
Ron Plain
The demand for the three major meats was down last year. Pork demand was down 3.5 per cent, beef down 4.1 per cent and broiler down one per cent.

Demand weakness for all meats in the last year is probably mostly due to the weak general economy and relative high unemployment rate. Though the odds are very high that demand for meats will be down in 2009 from 2008.

This weaker demand along with the relative high grain prices means the hog herd will need to be reduced more than we have done so to date. We probably need to reduce the breeding herd at least double the 1 December 2008 reduction from a year earlier. We believe the herd will need to be reduced at least 5 percent and maybe as much as 10 per cent if demand continues weak as seems most likely.

Barrow and gilt weights continued their seasonal decline with Iowa-Minnesota weights at 268.7 pounds last week down 0.3 pounds from a week earlier but up 0.4 pounds from a year earlier. This data continues to adds evidence to the belief that marketing are not as current as they were since late summer.

Gilt slaughter for the past month has been below a year earlier. This suggests we probably have stopped the decline that was started last winter. The probabilities are high that we need to reduce the breeding herd another 3-5 per cent to get marketing more in line with demand and get a price that at least meets costs for the average cost producer.

Pork product cutout held basically steady this week with quite small changes day to day. The cutout this Thursday afternoon at $57.14 was up $0.14 per cwt from a week earlier. Loins at $74.66 per cwt were up $0.10 per cwt, Boston butts at $58.23 were down $1.97 per cwt, hams at $39.34 per cwt were up $0.36 per cwt and bellies at $72.31 were down $0.10 per cwt from seven days earlier.

Unless demand strengthens or marketing are less than expected, 2009 will likely register losses for the average cost production that did not take price protection.

The national trend on feeder pigs last week was $2-3.00 per head lower. The average price for early-weaned 10-pound basis pigs was $40.98 per head. For 40 pound basis pigs the average price was $58.00 per head. We would still rather be sellers than buyers at these prices.

The top live prices for barrows and gilts Friday morning were $0.25 to $1.50 per cwt higher compared to last week. The weighted average negotiated carcass prices Friday morning were $1.76 - $6.74 per cwt lower compared to a week earlier.

The live prices for select markets Friday morning were; Peoria $36.00 per cwt, Zumbrota Minnesota $38.00 per cwt and interior Missouri $40.25 per cwt.

The weighted average negotiated carcass prices by areas Friday morning were; western Cornbelt $53.55 per cwt, eastern Cornbelt $52.95 per cwt, Iowa-Minnesota $53.10 per cwt and nation $52.97 per cwt.

[mikey]

Tuesday, February 10, 2009Print This Page
Moving Market Pigs with Less Stress
US - Dr Matt Ritter (Elanco Animal Health) and Dr Nick Berry (Cargill, Inc.) have studied the effects of moving market weight pigs in different group sizes during loading on stress responses and transport losses at the packing plant for Pork Information Gateway.


Dead and non-ambulatory pigs at the packing plant represent animal welfare and economic concerns to the US swine industry. Furthermore, non-ambulatory livestock are the subject of increased rules and regulations. Therefore, it is essential to identify pre-disposing factors for transport losses in market weight pigs and to develop management strategies to reduce these losses under current US commercial conditions.



Picture: Pork CheckoffA collaborative research project was recently conducted by Cargill, Inc. and Elanco Animal Health to evaluate the effects of moving market weight pigs (approximately 265 lbs) in two different group sizes (groups of four versus groups of eight) through a 30-inch wide aisle during loading on loading time, physical signs of stress (during loading and unloading) and transport losses at the plant.

The key findings from this study were that pigs moved in groups of four compared to groups of eight during loading:

required less time to load
had lower rates open-mouth breathing and skin discoloration during loading and unloading and
had lower percentages of dead and non-ambulatory pigs at the plant.
These data confirm that group size during loading has a major impact on transport losses at the plant. Additional research is necessary to determine the optimal group size for moving pigs of all ages through various aisle widths

[mikey]

Tuesday, February 10, 2009Print This Page
CME: Cost Pattern Differences for Hogs and Cattle
US - CME's Daily Livestock Report for 9 February 2009.



Profits in the pork and cattle feeding sectors have been hard to come by in recent months and recent changes in both grain and market animal prices suggest that they may not be just around the corner in 2009. The graphs below contain historical cost and price data as well as estimated costs.

 


The top graph is based on Iowa State Univerisity’s Estimated Returns for Iowa Farrow-to-Finish Operations. The historic data seen here can found at Dr. John Lawrence’s ISU website — jdlaw@iastate.edu. Note that the blue line represents ISU’s actual cost estimates while the red line is a prediction equation using corn and soybean meal futures lagged 1 and 6 months and a time variable as the independent variables. The prediction equation has an R-square of 0.97 meaning that it explains 97 per cent of the historic variability in ISU’s cost estimates. The green line is for Iowa-Minnesota butcher hog prices. The losses of late 2007 and most of 2008 are apparent from the relationships between the price and cost lines. Only last summer’s impressive and rather unexpected hog price rally prevented 2008 from being even worse.

Hog production costs have fallen sharply since last summer when they peaked out in the low $80s for pigs sold in July and August. The reason, of course, is the sharp reduction in grain prices since a) the 2008 crop became obviously adequate and b) oil prices fell by over $100/barrel. Projected production costs for 2009 are in the $67—$69/cwt carcass range using corn and meal prices from Monday. At the time of last summer’s cost peak, futures prices for corn and beans implied breakeven costs for 2009 above $90/cwt carcass. But don’t let the cost decline, though significant and VERY welcome by pork producers, distract you from the fact that 2009 breakeven costs are still nearly $20/cwt carcass above the pre-2007 “normal” level of $52—$54. Only summer CME Group Lean Hog futures lie above that price level at present.

The lower graph shows estimates of Southern Plains cattle feeding costs from Denver’s Livestock Marketing Information Center. The forecast costs run only through July. As can be seen, the average price of cattle in the Southern Plains has failed to cover estimated costs since mid-2007 and was $20/cwt. live ($240/ head or so) short in December. Projected breakeven costs for fed cattle are on their way down but CME Live Cattle futures through June are still nowhere near high enough to cover these projected breakeven cost levels.

Readers might ask “Why the difference in cost patterns for hogs and cattle - especially in 2004-2005 and now projected for 2009?” The answer is feeder cattle prices. They exploded when BSE was discovered in Canada in May 2003 and cattle imports from Canada were banned. The feeder cattle price increase drove breakevens from around $75/cwt live to the upper $80s. The cost increase driven by corn prices from 2006- 2008 was then not nearly as dramatic for cattle feeders as for pork producers simply because part of that increase was taken out of feeder cattle prices. Now, lower feeder cattle prices and lower corn prices suggest a much sharper reduction in fed cattle production costs than for hog production costs in 2009. There is no feeder pig market reflected in the farrow-to-finish (ie. birth to market weight within one business entity) operation modeled by the top chart so the cost changes are driven exclusively by lower input prices.

[mikey]

Thursday, February 12, 2009Print This Page
US Pork Export on Winning Streak for 17 Years
US - The international marketplace continued to roll out the red carpet for US pork, beef and lamb products in 2008, recording double-digit increases for all over 2007 levels, according to statistics released by the US Meat Export Federation (USMEF).

 

Pork has been the pacesetter for US red meat exports, achieving a 17th consecutive record-setting year of increased export numbers in 2008. For the month of December, total pork (pork plus variety meat) export volumes rose 19.7 per cent over 2007 while export values rose 19.2 per cent. While those are healthy gains, they are dwarfed by the 12-month figures for 2008: volume up 57 per cent to more than 2 million metric tons (4.5 billion pounds) and value up 55 per cent to nearly $4.9 billion.

While there are ups and downs on a country-by-country basis, the key export markets for US red meat continue to perform fairly consistently, according to USMEF Economist Erin Daley.

Ms Daley noted that Mexico, the largest US pork market in December, set a monthly record with 48,151 metric tons (106.2 million pounds) valued at $77 million. This represents a jump of 16 per cent in volume over the prior month and a 77 per cent increase over the previous December. For the year, Mexico was the third-largest destination for US pork, registering a 43 per cent hike in pork volume (396,609 metric tons or 874.4 million pounds) and a 54 per cent jump in value (to $691 million).

The largest market for US pork, Japan reported substantial gains for December and the entire year: achieving 16 and 28 per cent gains in volume and value, respectively, for the month versus December of 2007, and 26 per cent and 34 per cent in volume and value for the year. Japan imported 451,853 metric tons (996.2 million pounds) of pork valued at $1.5 billion – accounting for 31.6 per cent of total US pork export value in 2008.

Areas of concern
While the numbers tell a great story, Ms Daley notes that there are areas of concern for exports driven by the global economic slide.

"With 35 US pork facilities delisted, exports to Russia could face a rough start in 2009, not to mention the challenging economic situation and the devaluation of the ruble," she said. The only good news is that Russia increased the United States’ tariff rate quota (TRQ) from 50,700 metric tons (111.8 million pounds) to 100,000 metric tons (220.5 million pounds) for 2009 – allowing an additional 49,300 metric tons (108.7 million pounds) to enter at 15 per cent duty instead of the over-quota rate of up to 75 per cent (not less than 1.5 euro/kg).

Still, for the year US pork exports to Russia reached 217,767 metric tons (480.1 million pounds) valued at $476 million, increases of 118 per cent in volume and 130 per cent in value over 2007. In December, both the volume and value of pork exports was down sharply from one year ago, reaching the lowest volume levels since December 2006.

China is another area that bears watching, Ms Daley believes. The greater China/Hong Kong region emerged as the No. 2 market for US pork in 2008, purchasing 399,562 metric tons (880.9 million pounds) valued at $689.4 million – increases of 136 per cent in volume and 155 per cent in value over 2007.

However, Ms Daley believes it is unlikely that China's pork imports in 2009 will match last year's record. Increased industry profitability last spring, coupled with a range of hog raising subsidies, is supporting a substantial expansion of China's herd and lower hog and pork prices.

According to the National Bureau of Statistics, by the end of the third quarter of 2008, China's live hog inventory had increased 6.6 per cent from the year-earlier figure, and the sow population increased 12.4 per cent. Total marketed hogs increased 5.8 per cent and meat production was up approximately 6 per cent.

Pork Export Facts
During 2008, 24.4 per cent of US pork production (including variety meat) was exported. This compares to 16.5 per cent in 2007.


The value of exports per head slaughtered equated to $42.31 compared to $29.16 in 2007.
Other pork highlights
Canada - US pork imports remained fairly close to year-ago levels during the last quarter of 2008, with December exports at 13,390 metric tons (29.5 million pounds). For the year, exports were up 15 per cent to 170,536 metric tons (nearly 376 million pounds) valued at $557.6 million, a 13 per cent increase.
"Imports of Canadian hogs were down 50 per cent in January, with a corresponding increase in Canadian slaughter (up 15.8 per cent) and pork production (up 9.9 per cent)," Ms Daley noted. "Live hog trade has been impacted by the weak Canadian dollar, making production in Canada more competitive."



South Korea – Imports were steady in December at 10,535 metric tons (23.2 million pounds). Although below year-ago levels, this volume was not far off the 2008 monthly average of 11,128 metric tons (24.5 million pounds). For the year, exports to Korea were up 34 per cent to 133,532 metric tons (294.4 million pounds) valued at $284.5 million, up 23 per cent versus 2007 totals.

[mikey]

Friday, February 13, 2009Print This Page
Enhanced Fertility in Boars with Selenium
US - Boars fed a supplement of organic selenium were more fertile than those fed inorganic selenium or no supplement, according to researchers working for Virginia Cooperative Extension.



The specific objectives of the research reported by Dr Mark Estienne of Tidewater AREC and co-authors were to evaluate sperm fertilizing capability for boars fed selenium from either organic or inorganic sources and to determine if enhanced motility characteristics and fertility exhibited by spermatozoa collected from boars fed selenomethionine (Sel-Plex) are maintained during long-term liquid storage in commercially available extenders.

The researchers concluded that supplementation of boar diets with selenomethionine resulted in enhanced motility characteristics of spermatozoa and fertilizing capability during liquid storage at 18°C compared with boars fed sodium selenite or boars not receiving selenium supplementation.

They added, "These results have tremendous implications for AI breeding programmes within the swine industry. The mechanisms responsible for the effects demonstrated in this report remain to be determined."

Reference:
Estienne M.J., A.F. Harper, J.W. Knight and S. M. Speight. Enhanced Fertility in Boars Fed Diets Supplemented with Sel-Plex® Selenium. Virginia Cooperative Extension, Livestock Update, February 2009.

[mikey]

Saturday, February 14, 2009Print This Page
Weekly Review: Packers Get Aggressive Again
US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

 
Ron Plain
Feeder pigs at United Tel-O-Auction this week were about $10 per cwt below four weeks earlier. The United pigs by weighted groups were: 50-60 pounds $91-113 per cwt and 60-70 pounds $84 per cwt.

The prices for the US last week shows 50-54 per cent lean 10 pound basis pigs between $39-40 per head and 50-54 per cent lean 40 pound basis a little over $59 per head average.

The average weight of barrows and gilts in Iowa-Minnesota live last week at 269 pounds up 0.3 pound from a week earlier and up 0.9 pound from a year earlier. Carcass weights at 201 pounds under Federal Inspection for the week ending 24 January were the same as a year earlier. For the week ending 31 January carcass weights at 202 pounds up two pounds from 12 months earlier.

These data continues to indicate producers slowed marketings relative to a year earlier. In August, live barrow and gilt were as much as three pounds below a year earlier. This change in weights suggests producers have backed up marketings between one to two days since late summer.

Packers have been very aggressive again this week in buying hogs Thursday the afternoon cutout was $58.54 per cwt and the western Cornbelt negotiated base price was 61.40 per cwt. This means they had only a portion of the drop to pay their entire slaughter and processing costs, which means red ink.

The live hog price Friday morning were $0.50-2.00 per cwt higher compared to a week earlier. The weighted average negotiated carcass prices Friday morning were $2.88-8.99 per cwt higher compared to seven days earlier.

The live prices Friday morning for select markets were: Peoria $3.65 per cwt, Zumbrota, Minnesota, $40 per cwt and interior Missouri $41 per cwt. The weighted average negotiated carcass prices Friday morning by areas were: western Cornbelt $62.05, eastern Cornbelt $55.83 per cwt, Iowa-Minnesota $62.09 per cwt and nation $58.61 per cwt.

We still believe the odds are high for the normal seasonal increase in hog prices this spring. In the past five years the increase in price from February to June has been about $8 per cwt live or nearly $11 per cwt in carcass.

Slaughter this week under Federal Inspection was estimated at 2,236 thousand head, up 0.7 per cent from a year earlier.