American Hog News USDA

[Mustang Sally Farm]

Monday, March 28, 2011
CME: Key Data from Latest Hogs and Pigs Report
US - USDA’s quarterly Hogs and Pigs report, released Friday afternoon, contained estimates of 1 March US hog and pig inventories that were modestly higher than one year ago and, for the most part, slightly higher than analysts’ prereport estimates, according to Steve Meyer and Len Steiner.


The key data in the report are shown below. Note that all of the inventory numbers were higher than the average of analysts’ estimates. Only the 50-119 pound inventory exceeded the estimate by more than 1 per cent. The report may be slightly bearish for nearby CME Lean Hog futures on Monday. Lower-than-expected farrowing and farrowing intentions numbers may be slightly bullish for deferred contracts.


Some highlights from the report are:

A 1 March breeding herd that numbers 5.788 million head, 0.5 per cent higher than one year ago and 10,000 higher than on 1 December. The trade had expected a slight reduction in the herd. We commented last week that we did not think sow slaughter had been large enough to reduce the breeding herd and USDA apparently agrees. The “hog crush” (ie. estimated profits using corn, soybean meal and lean hogs futures) for 2011 has improved some since March 1 but is still not large enough in our opinion to encourage widespread expansion. But the primary limiting factor for hog number expansion remains uncertainty about the 2011 corn crop and resulting feed cots. Low projected 2011 carryout stocks offer livestock and poultry producers no comfort for the 2011-12 crop year.


Market hogs on US farms numbered 58.176 million head, 0.6 per cent higher than last year but 2.8 and 4.7 per cent smaller than on 1 March of 2008 and 2009, respectively. While slightly larger than in 2010, hog supplies are still significantly smaller than just 2 years ago — in response to higher costs!


10.744 million head of pigs weighing 180 pounds and over on 1 March, virtually identical to the number of animals in this weight class one year ago. Many of those pigs will have already reached slaughter weight by now. Federallyinspected slaughter since 1 March has been 1.1 per cent LOWER than during the same period (24 weekdays and 4 Saturdays) one year ago. If anything, more of the 180 and over category should have reached market weight in March of this year due to better quality 2010 corn and higher growth rates. The difference here raises a bit of concern that USDA’s pig numbers may be a bit high. It is not, however, large enough to conclude that with any certainty.


Farrowing numbers for Dec-Feb and farrowing intentions for the next two quarters that are significantly lower, relative to last year, than is the breeding herd. The implication is lower farrowing rates in the immediate past quarter and the two quarters to come. In fact, there have been only two lower annualized farrowing rates since the advent of circovirus vaccines in 2007 and, should they be correct, these would mark the first time since 1996-97 that three straight quarters have been below the 12-quarter moving average. Lower actual litters farrowed are definitely possible if the breeding herd is right. Of course, the breeding herd could be high.


The second quarter of a return to 2 per cent yr/yr litter growth. This marks 10 of the last 12 quarters in which that rate has been achieved. The 9.8 pigs/litters saved in Dec-Feb is the highest ever for that quarter.
 

[Mustang Sally Farm]

Thursday, March 31, 2011
March Quarterly Hogs & Pigs Report Analysis
US - USDA’s March hogs and pigs report said the hog herd was slightly larger than pre-release trade forecasts, writes Ron Plain.
 
Ron Plain
USDA said the market inventory was up 0.6 per cent. The average of the pre-release trade estimates was for a 0.1 per cent decline. Kept for breeding was up 0.5 per cent according to USDA. The trade estimate was for a 0.2 per cent decline. USDA’s estimate of the total number of hogs and pigs on US farms at the start of March was 0.6 per cent larger than 12 months earlier. The average of the trade estimates was for no change. (See Table 1 below)

USDA made some upward revisions to past inventory estimates to bring them more in line with winter hog slaughter. USDA raised their previous estimate of the December market hog inventory by 300,000 head (0.5 per cent), increased the reported number of sows farrowed during June-August 2010 by 1.3 per cent and increased the June-August pig crop by 359,000 head (1.3 per cent).

The March swine breeding herd was 7.1 per cent lower than at the last cycle peak in December 2007. For the last five quarters, the US swine breeding herd has been within 12,000 head of 5.772 million. In 2010 the March breeding herd inventory was 90,000 head smaller than on 1 December. This year it was 10,000 head larger. Thus, USDA says the breeding herd grew by 100,000 head more this winter than last. December-February sow slaughter was down by 28,900 compared to a year ago. About 35,500 of the drop in sow slaughter was due to reduced imports of Canadian sows for slaughter, leaving 6,600 more US sows slaughtered this winter than last. The USDA data implies 106,600 more gilts were added to the breeding herd this winter than last.

USDA said winter (December-February) farrowings were down 0.6 per cent and forecast both spring and summer farrowings to be down 2.6 per cent compared to 12 months earlier. (See Table 3) Winter farrowings were 0.2 per cent higher than trade expectations. The forecast of spring farrowings is 1.2 per cent lower than expected and summer farrowings are forecast to be 2.1 per cent below the trade forecast. The lack of growth is likely due to high feed costs which have pushed breakeven prices above $60/cwt (live) and $80/cwt (carcass). If USDA is right, the number of sows farrowed will be below year-earlier for 13 consecutive quarters.

USDA says the breeding herd is up 1.5 per cent, but the number of litters to be farrowed in the next six months will be down 2.6 per cent. That seems an unlikely combination.

The number of pigs per litter remains high. The trade was expecting a 1.7 per cent increase, but USDA said December-February pigs per litter were 2.0 per cent higher than the same months last year. The benefit of reduced farrowings is being offset by increases in the number of pigs weaned per litter. Winter farrowings were down 0.6 per cent; but with 2.0 per cent more pigs per litter, the winter pig crop was up 1.4 per cent.

USDA’s survey indicated the number of market hogs weighing 180 pounds or more on 1 March was even with 12 months earlier. (See Table 2) However, it looks like March barrow and gilt slaughter will be 1.5 per cent below last year. The 120-179 pound market hog group was also unchanged from March 2010. The 50-179 pound inventory was up 1.5 per cent; and the inventory of pigs weighing less than 50 pounds was up 0.7 per cent compared to a year earlier.

Live animal imports from Canada during the December-February quarter showed feeder pigs down 0.9 per cent and slaughter hog imports down 9.5 per cent. In 2007, 10.0 million live hogs were imported from Canada. In 2009, 6.4 million head came south. Imports of Canadian hogs and pigs for 2010 totaled 5,747,827 million head. Look for 2011 imports to total close to 5.5 million head.

Based on the 50-179 pound market hog inventory and the expectation of little change in live hog imports, our forecast is for an increase of 1.0 per cent in second quarter 2011 daily hog slaughter compared to April-June 2010. With this level of pork production, we expect 51-52 per cent lean hogs to average in the low to mid $60s live and Iowa-Minnesota negotiated sales to average in the low to mid $80s on a carcass weight basis.

For the third quarter of 2011 we expect hog slaughter to be up 0.8 per cent compared to July-September 2010 with 51-52 per cent lean hogs averaging in the mid $60s live, and Iowa hogs averaging in the mid $80s/cwt on a carcass basis.

With the number of litters farrowed expected to be down 2.6 per cent this spring and pigs per litter increasing by 2 per cent or so, the spring pig crop is likely to be slightly below a year earlier. We are forecasting fourth quarter 2011 slaughter to be down 0.9 per cent compared to a year ago. Look for carcass prices of barrows and gilts to average in the upper $70s/cwt. Slaughter weights are likely to average 1.0-1.5 per cent higher this year.

The forecast 2.6 per cent decrease in fall farrowings should be supplemented by an increase in litter size but still yield a fall pig crop below a year-earlier causing first quarter 2012 hog slaughter to be down 1 per cent or so on a daily basis. Our estimates of slaughter and prices for the next four quarters are in Table 4. Our price forecasts are well below what the futures market is predicting.

Table 1.  Hog Inventories March 1, U.S.

______________________________________________________________

                                           2011 as % of 2010
       Market                                    100.6
       Kept for breeding                         100.5
       All hogs and pigs                         100.6
______________________________________________________________

Table 2.  Market Hogs on Farms December 1, U.S.
______________________________________________________________

     Weight Category                       2011 as % of 2010
        Under 50 pounds                          100.7
        50 - 119 pounds                          101.5
        120 - 179 pounds                         100.0
        180 pounds and over                      100.0
     Pig Crop
        December-February                        101.4
______________________________________________________________

Table 3.  Sows Farrowed and Farrowing Intentions, U.S.
______________________________________________________________

                                            2009 as % of 2008
       March-May 2009                             98.9
       June-August 2009                           96.2
       September-November 2009                    96.3
                                            2010 as % of 2009
       December-February                          95.4
       March-May 2010                             97.1
       June-August 2010                           99.5
       September-November 2010                    97.7
                                            2011 as % of 2010
       December-February                          99.4
       March-May 2011                             97.4
       June-August 2011                           97.4
______________________________________________________________


Table 4.  Commercial Hog Slaughter and Barrow and Gilt Price by Quarter
_______________________________________________________________________

           --Comm. Slaughter--   ------Barrows & Gilts, price/cwt------
                     Change        51-52%    Iowa-Minn   Non-packer-sold
Year &     Million    from         Lean         Base            Net
Quarter      Head   Year ago       Live        Carcass        Carcass
_______________________________________________________________________

2006 1       26.208   + 2.6%       $42.63       $56.38         $58.37
     2       24.839   - 0.8         48.45        65.27          65.96
     3       25.810   + 1.1         51.83        68.04          69.13
     4       27.880   + 1.4         46.13        60.53          62.04
     Year   104.737   + 1.1         47.26        62.54          63.86

2007 1       26.684   + 1.8%       $46.04       $59.90         $62.69
     2       25.526   + 2.8         52.55        69.45          71.39
     3       26.566   + 2.9         50.34        66.14          69.17
     4       30.396   + 9.0         39.44        52.08          56.83
     Year   109.172   + 4.2         47.09        61.91          65.04

2008 1       29.601   +10.9%       $39.64       $52.49         $57.41
     2       27.941   + 9.5         52.51        70.43          72.24
     3       28.696   + 8.0         57.27        75.67          78.05
     4       30.214   - 0.6         41.92        55.60          61.38
     Year   116.452   + 6.7         47.83        63.58          67.27

2009 1       28.503   - 3.7%       $42.11       $57.23         $60.43
     2       27.072   - 3.1         42.74        57.32          61.76
     3       28.428   - 0.9         38.90        51.43          56.68
     4       29.615   - 2.0         41.20        54.98          57.64
     Year   113.618   - 2.4         41.24        55.23          59.11

2010 1       27.631   - 3.1%       $50.41       $66.81         $68.32
     2       26.069   - 3.7         59.60        79.04          79.42
     3       26.927   - 5.3         60.13        79.44          80.70
     4       29.629   + 0.1         50.11        65.21          69.26
     Year   110.257   - 3.0         55.06        72.62          74.47

2011 1*      27.490   - 0.5        $60.06        $79.00        $80.50
     2**     26.330   + 1.0        62 - 65       82 - 86       84 - 88
     3**     27.150   + 0.8        63 - 66       83 - 87       85 - 89
     4**     29.360   - 0.9        58 - 61       77 - 81       79 - 83
     Year** 110.330   + 0.1        60 - 63       80 - 84       82 - 86

2012 1**     27.220   - 1.0        $61 - 64      $81 - 85      $84 - 88
 *estimated
 **forecast

[Mustang Sally Farm]

Thursday, April 07, 2011Print This Page
Higher Retail Pork Prices Needed for Profitability
US - A US-based agricultural economist warns the price consumers pay in the grocery store for pork will need to rise for pork producers to maintain profitability




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. 
Although near record high live hog prices have brought US pork producers back into the black rising feed costs have kept a lid on profits.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, notes US exports were up last year, the USDA is forecasting exports could set a new record in 2011 and we're starting to see improvement in the US economy which will translate into stronger domestic demand and that too will be good for hog prices.

Dr Ron Plain-University of Missouri
Retail prices here in the United States in January and February, both months were the fourth highest ever.

Seasonally retail prices tend to move higher as you move on into summer.

We're expecting record high retail prices in grocery stores for pork this year.

Bacon has been an especially strong price situation for the past year or so.

Bacon's a bit of an in food right now and that's helping lift the overall value of the pork cut-out.

Seasonally we tend to get the highest hog prices here in the United States in late spring early summer so if we're going to be able to move hog prices higher for another 60 or 90 days we're going to have to push that grocery store meat case price of pork to record levels.

The key as to whether we're going to be able to sustain that or not is overall strength of the economy and one of the other key things that's helping out is beef prices in grocery stores are already at record levels so, from a competing meats standpoint, pork doesn't look over-priced at all.

Dr Plain says if the US economy picks up we're likely to see some strong demand for pork but any signs of weakening in the US economy will be negative for hog prices.

[Mustang Sally Farm]

Monday, April 11, 2011
USDA Raises Live Pig Price Forecast
US - In the April WASDE report, USDA raised their forecast of the average live price of 51 to 52 per cent lean barrows and gilts in 2011 by $2.50 per cwt to between $62 and $65 per cwt, writes Ron Plain in his latest Hog Outlook report.
 
Ron Plain
USDA is now predicting 2011 domestic per-capita pork consumption at 46.8 pounds per person, down 0.9 pound from last year, but 0.1 pound higher than their March estimate.

The federal government may 'shutdown' tonight, wrote Dr Plain last Friday (8 April). How disruptive this will be to livestock markets is unclear. During the shutdowns in late 1995, daily USDA reports on slaughter and prices continued. Hopefully, that will be the case this time, should a last minute agreement not be reached.

For the second week in a row, hog prices ended the week at record levels. The national weighted average carcass price for negotiated hogs Friday morning was $92.15/cwt, up $3.31 from the record set the previous week. The eastern corn belt averaged $92.70, also a record. Neither the western corn belt nor Iowa-Minnesota had enough sales Friday morning for a published price quote. The top live hog price Friday at Sioux Falls was $64/cwt. The top at Zumbrota was $62 and Peoria’s top was $60.50/cwt. The interior Missouri live top Friday was $63.75/cwt, up $3.00 from the previous Friday.

USDA's Thursday afternoon calculated pork cutout value was $94.28/cwt, down $1.11 from the previous Thursday with hams sharply lower. Loins, bellies and butts were higher.

This morning’s average hog carcass price was 98.3 per cent of the pork cut-out value. That is unsustainably high. Either hog prices are going to drop or cut-out is going to rise, or both.

The live hog price is very high relative to the carcass price. On Thursday, the average negotiated barrow and gilt purchase on a live weight basis was $73.38/cwt which was 81.1 per cent of the day's average carcass price of $90.42/cwt. This too will not last.

The average carcass weight of barrows and gilts slaughtered the week ending 26 March was 206 pounds, unchanged from the previous week and five pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 273.7 pounds, down 0.4 pounds from the week before and up 3.5 pounds compared to a year earlier. This was the 29th consecutive week above year-earlier.

Hog slaughter totalled 2.069 million head this week, down 2.8 per cent from the week before, but up 3.0 per cent from the same week last year, which was light because it began with Easter Monday.

The April lean hog futures contract ended the week at $93.15/cwt, down $1.07 from the previous Friday. The May contract ended the week at $100.97/cwt. June hogs settled at $100.65. July and August also closed slightly above $100/cwt.

The nearby corn futures contract (May) traded above $7.70 per bushel at times this week and settled at $7.68 on Friday. The old record for nearby corn was set on June 27, 2008 at $7.55/bushel for the July contract.

[Mustang Sally Farm]

Wednesday, April 13, 2011
Weekly Roberts Market Report
US - The story of the day continues to be centred on corn.

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

Lean hogs
Lean hogs on the CME finished up on Monday with the exception of the August 2011 contract. The APR'11LH contract closed at $93.250/cwt; up $0.100/cwt but $0.95/cwt lower than a week ago. AUG'11LH futures closed at $100.85/cwt; down $0.025/cwt and $3.25/cwt off from last report. Higher pork prices on faltering beef and talk of higher cash trade this week were supportive. Seasonal trend-strength in hog prices ahead of Memorial Day was seen as positive in the pits. Export markets were very supportive as Japan increased imports due to the disaster there and South Korea buys more amid herd reductions on reports of foot-and-mouth disease there limiting internal supply. Higher corn prices kept the lid on however hog prices. Cash processor demand was flat on Monday while they take a 'wait-and-see' attitude toward price movement. These same processors may have to bid up prices later in the week to fill processing lines. USDA put the pork cut-out at $94.28/cwt; up $0.32/cwt and $0.16/cwt higher than last week at this time. According to HedgersEdge.com, the average packer margin was at a positive $0.85/head based on the average buy of $67.82/cwt vs. the average break-even of $68.13/cwt. The latest CME lean hog index was placed at $91.23; up $0.20 and $2.62 over last report.

Corn
Futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY'11 contract closed at $7.776 up 8.0 cents/bu and 17.5 cents/bu over last week at this time. The DEC'11 contract closed at $6.572; up 4.25 cents/bu and 11.75 cents/bu over last report. Dwindling US corn stocks continued to support corn futures. Unless corn exports slow the US is treading thin ice and may run the risk of depleting its corn supplies before harvest amid stocks at their lowest levels since the 1930s. Good corn planting weather has helped producers get off to their best start yet as intentions show farmers plan to plant the second largest area to corn since World War II. Everybody and his brother are planting corn or cotton. Tight local corn supplies have encouraged the Chinese government to sell more off-quality wheat from government reserves for livestock feed. Funds bought more corn positions raising net long positions to their highest levels in four weeks after last week's USDA stocks report. Funds continue to build long positions and if this keeps up any glitch in the corn supply will have a huge impact on prices. Fundamentally corn continues to show bullish strength.

Soybean
Futures on the Chicago Board of Trade (CBOT) finished fell on Monday. The MAY'11 contract closed at $13.684/bu; down 23.75 cents/bu and 15.75 cents/bu lower than last Monday. NOV'11 soybean futures closed off 15.75 cents/bu at $13.802/bu and 8.75 cents/bu lower than last report. Soybeans saw their largest decline in a month, sliding almost two per cent as South America reports a bumper crop harvest there and growing concerns that China may slow soybean imports. Early Monday, Chinese officials said it is highly likely that some cargoes of soybeans will be deferred or even cancelled due to poor crush margins. Barge basis for soybeans was steady to weak early Monday amid slow grain movements and slack demand. Lower crude oil futures put pressure on soybeans, particularly on the soybean oil contract. Fundamentally soybeans are looking more bearish.

Wheat
Futures in Chicago (CBOT) closed down on Monday with the exception of the nearby May contract. The MAY'11 wheat contract closed at $7.982/bu; up 0.75 cents/bu and 8.25 cents/bu over last report. JULY'11 futures finished down 0.5 cents/bu at $8.316/bu but 5.0 cents/bu higher than this time last week. Wheat prices were fairly firm on corn strength. However, prices were limited due to forecasts for rain in the US Plains. Profit taking also weighed on prices. China said last Tuesday it will sell another significant portion of state wheat reserves because quality problems. This is the second such sale for animal feed production amid tight local corn supplies. India is yet to decide whether it will allow exports of wheat this year. Fundamentally wheat has some strength. Weather markets will begin to weigh in.

[Mustang Sally Farm]

Monday, April 18, 2011
US Pork Exports Positive for Hog Producers
US - Pork trade continues to be a positive for hog prices, writes Ron Plain.
 
Ron Plain
Pork exports during February were 7.2 per cent higher than 12 months earlier and pork imports were 7.2 per cent lower. The big growth markets for pork exports were South Korea, China, Russia and Japan. During the first two months of 2011, the US exported 20.6 per cent of our pork production while pork imports equaled only 3.4 per cent of production. A stronger world economy and a weakening dollar are two causes of these trade gains. Compared to a year earlier, the trade-weighted value of the dollar was down 4.6 per cent in February.

The year-over-year inflation rate for March was 2.7 per cent, the highest since December 2009. A rising inflation rate could lead to higher interest rates and slower economic growth. That would not be good for meat demand.

Hog prices ended the week slightly below last week’s record levels. The national weighted average carcass price for negotiated hogs Friday morning was $91.41/cwt, down 74 cents from the record set the previous week. The eastern corn belt averaged $91.32/cwt. The western corn belt averaged $91.52/cwt and Iowa-Minnesota had a $91.59 average price on the morning report. The top live hog price Friday at both Peoria and Zumbrota was $64/cwt. The interior Missouri live top Friday was $64.50/cwt, up 75 cents from the previous Friday.

USDA’s Thursday afternoon calculated pork cutout value was $96.00/cwt, up $1.72 from the previous Thursday with loins and hams higher. Prices for bellies and butts were lower this week. This morning’s average hog carcass price was 95.2 per cent of the pork cutout value. That is lower than the week before but high enough to put downward pressure on hog prices.

The live hog price continues to be high relative to the carcass price. On Thursday the average negotiated barrow and gilt purchase on a live weight basis was $74.60/cwt which was 81.8 per cent of the day’s average carcass price of $91.16/cwt.

Hog slaughter totaled 2.028 million head this week, down 2.0 per cent from the week before, but up 0.5 per cent compared to the same week last year.

The average carcass weight of barrows and gilts slaughtered the week ending 2 April was 206 pounds, unchanged from the previous week and 5 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 273.3 pounds, down 0.4 pounds from the week before and up 3.1 pounds compared to a year earlier. This was the 30th consecutive week above year-earlier. Although year-to-date hog slaughter is down, pork production is up 1.0 per cent thus far in 2011.

The April lean hog futures contract ended the week at $102.42/cwt, up $1.45 from the previous Friday. The June contract ended the week at $101.07/cwt. July hogs settled at $101.12.

The May corn futures contract lost 26 cents this week to end at $7.42/bushel on Friday. September corn ended the week at $7.015.

[Mustang Sally Farm]

US Pork Outlook - April 2011
Recent larger pig numbers are expected to be mainly offset by continued strong domestic and international demand for US pork, according to the latest Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service.
 

Summary
Pork/Hogs: The March Hogs and Pigs report showed a slightly larger inventory of market hogs, but any price effects of the slightly larger numbers are expected to be largely offset by continued strong domestic and international demand for US pork. Continued productivity gains are likely to reduce effects of hog producers’ stated intentions to reduce spring and summer farrowings.

2011 live equivalent prices of 51 to 52 per cent lean hogs are expected to be $62 to $65 per cwt, compared with $55.06 a year ago. Second-quarter 2011 prices are expected to be $67 to $69 per cwt, up from $59.60 in the same period of 2010. February exports were more than seven per cent greater than in February 2010, with Japan, Mexico and South Korea together accounting for 64 per cent of shipments.

Pork/Hogs
All hogs and pigs inventory increases while farrowing intentions lag
The Quarterly Hogs and Pigs report released by USDA on 25 March offered a mixed perspective of US hog production. The report showed a slightly higher 1 March inventory of all hogs and pigs. The market hog component of the inventory was almost one per cent larger than a year ago. With all other factors unchanged, slightly higher market hog numbers could be expected to have a dampening effect on hog prices. But it is more likely that expected strong domestic and foreign pork demand will offset any downside price effects of higher market hog inventories.

The report also indicated that producers intend to farrow about three per cent fewer female breeding animals in both the spring (March-May) and summer (June-August) quarters of this year. Even if producers follow through with their stated intentions, it is likely that continued gains in pigs per litter will limit production effects of lower farrowings. Productivity gains are thus expected to combine with lower stated intentions to yield a spring pig crop only slightly smaller than a year ago. Lower summer farrowings are expected to be more than offset by continued gains in seasonally high litter rates, and thus to result in a marginally higher summer pig crop.

Commercial hog production this year is expected to be 22.6 billion pounds, slightly higher than last year. Second-quarter production is expected to come in at 5.35 billion pounds, almost one per cent above the same period last year. Live equivalent prices of 51 to 52 per cent lean hogs are expected to be $62 to $65 per cwt this year, more than 15 per cent above 2010 prices. For the second quarter, the expected price of $67-$69 is more than 14 per cent above the same period last year.

February exports strong
February US pork exports were almost 388 million pounds, more than seven per cent higher than a year ago. While the relatively low-valued US dollar benefited most buyers of US pork products in February, the value of the dollar with respect to the Japanese yen, in particular, likely spurred Japanese purchases of US pork. February exports also reflect expected higher shipments to South Korea, in the aftermath of a series of recent outbreaks of foot and mouth disease. Shipments to Japan, Mexico and South Korea accounted for about 64 per cent of exports in February. First-quarter pork exports are expected to be 1.15 billion pounds, almost 10 per cent above the same period a year ago. For the year, US pork exports, forecast at 4.675 billion pounds are expected to be 10.6 per cent higher than a year ago and to account for 20.7 per cent of US commercial pork production.

US pork imports, at 60.4 million pounds in February, were about 7.2 per cent lower than a year ago. Of the five largest sources of imported pork, February shipments from Canada, Denmark and Italy were lower, while imports from Poland and Mexico were higher, year-over-year. While the relatively low value of the US dollar typically spurs US pork exports, it is also likely that US pork imports in February were slowed by the effects of the low-valued dollar. Live swine imports were almost 461,000 head in February, 1.7 per cent lower than in February 2010. Live swine imports were almost 461,000 head in February, 1.7 per cent lower than in February 2010. US imports of segregated-early-weaned animals increased almost nine per cent, likely reflecting strong returns in February from finishing hogs in the United States.

[Mustang Sally Farm]

Thursday, April 21, 2011
CME: Hog Price Series Post Significant Gains
US - Hog prices have commenced their annual rally the past three weeks with all of the major price series posting significant gains, write Steve Meyer and Len Steiner.


Two of those prices are shown in the charts below. The national weighted average net price for negotiated purchases is, in essence, the “spot market” price received by producers and paid by packers. It is the price of animals that are not sold under any sort of marketing agreement and it includes premiums/discounts for carcass quality — thus the “net” price designation as opposed to being a “base” price. As you can see, the rally for the net negotiated price has been very impressive, carrying it to a new records each of the past 2 weeks. The rally has nearly kept pace with last year’s spring rally and, should it continue at the ‘10 pace, into May, it would take “spot” hog values to about $105, even higher than today’s May close.

 


The national weighted average net price across all purchasing methods has rallied as well but, as should be expected, that rally has been much less explosive since this price series includes hogs sold/purchased through formula contracts, contracts tied to CME futures prices (which could have been executed as much as a year ago— and thus be assigning lower values to hogs moving to slaughter right now!) and other agreements with prices tied to feed costs, costs of production, etc.. This year’s rally of the total net price has been a bit slower than that of 2010 but should it match last year’s rise in magnitude even this average price would get close to $100.

We have documented the fact that both domestic and export demands for pork have been strong but this most recent rally is being driven by a very predictable occurrence — lower hog supplies. As can be seen in the following chart, weekly slaughter fell by over 100,000 head over the past two weeks. You can see that the same decline happened last year BUT — that drop included the short slaughter week of Easter in the first week of April 2010. Obviously that short slaughter week this year should be this week — and we are already sharply lower on hog slaughter.


The bottom chart at right shows the average carcass weight of the barrows and gilts whose prices and carcass data are reported to USDA as part of the mandatory price reporting system. Lower MPR barrow and gilt weights support the idea of tightening supplies as producers must dig a little deeper into their finishing buildings to deliver hogs against these higher spot bids. That is not to say we are finding many (or any!) “light” hogs since the average is all the way down to a still-whopping 207 pounds. But it does suggest that producers are pretty current and are getting more so each week.

[Mustang Sally Farm]

Tuesday, May 03, 2011
US and Canadian Hog Inventory Up One Per Cent
US - This publication is a result of a joint effort by Statistics Canada and the USDA's National Agricultural Statistics Service (NASS) to release the total inventories of hogs, breeding, market hogs, sows farrowed and pig crop for both countries within one publication.
 

US and Canadian inventory of all hogs and pigs for March 2011 was 75.8 million head. This was up 1 per cent from March 2010, but down 2 per cent from March 2009. The breeding inventory, at 7.10 million head, was up slightly from last year and last quarter. Market hog inventory, at 68.7 million head, was up 1 per cent from last year but down 1 per cent from last quarter. The pig crop, at 35.1 million head, was up 1 per cent from 2010 but down 3 per cent from 2009. Sows farrowed during this period totaled 3.56 million head, down 1 per cent from last year and down 5 per cent from 2009.

United States inventory of all hogs and pigs on 1 March 2011 was 64.0 million head. This was up 1 per cent from 1 March 2010 but down 3 per cent from 1 March 2009. The breeding inventory, at 5.79 million head, was up slightly from last year and last quarter. Market hog inventory, at 58.2 million head, was up 1 per cent from last year, but down 1 per cent from last quarter. The pig crop, at 28.0 million head, was up 1 per cent from 2010 but down 2 per cent from 2009. Sows farrowed during this period totaled 2.86 million head, down 1 per cent from 2010 and down 5 per cent from 2009.

Canadian inventory of all hogs and pigs on April 1, 2011 was 11.8 million head. This was up 1 per cent from 1 April 2010 but down 1 per cent from 1 April 2009. The breeding inventory, at 1.31 million head, was down slightly from last year and last quarter. Market hog inventory, at 10.5 million head, was up 2 per cent from last year but down 1 per cent from last quarter. The pig crop, at 7.1 million head, was down 2 per cent from 2010 and down 5 per cent from 2009. Sows farrowed during this period totaled 708,000 head, down 2 per cent from last year and down 6 per cent from 2009.

[Mustang Sally Farm]

Friday, May 06, 2011Print This Page
Weekly Roberts Report
US - Besides the death of Osama bin Laden, a major news story of note is the planned intentional flooding of farmland in Missouri by the US Corps of Engineers.

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

The Corp intends to intentionally break a Mississippi levee in southeastern MO to save farmland and people’s property from flooding in Illinois.

The action is tied up in federal courts. If given the go ahead, about 130,000 acres of prime farm land will be in jeopardy and 100 homes will be flooded. The Army Corps called the possible break of the levee necessary to ease rising waters near Cairo, a 2,800 resident town located at the confluence of the Ohio and the Mississippi.

Missouri residents have asked the US Supreme Court to halt the plan. Explosives have already been loaded in Kentucky and are now on site at the levee to be breached. The fear is that if the levees are not blown up, the water levels in Cairo will rise up to 60 feet over flood stage.

The question of insurance has been raised as well. Since the flooding will be man-made vs. a natural catastrophe, Missouri residents fear they won’t be covered. And last but not least, there are fears that the flooded farmland will become useless for many years to come as the flooding will remove top soil and leave sand/silt in its wake that could take a generation to clear resulting in heavy injury to the quality of the farmland for many years.

LEAN HOGS on the CME closed up on Monday. The JUNE’11 LH contract closed at $95.475/cwt; up $0.250/cwt but $3.050/cwt lower than a week ago. AUG’11LH futures closed at $97.575/cwt; down $0.350/cwt and $1.900/cwt lower than last report. Futures started higher fueled by higher cash hog prices on forecasts for lower hogs numbers over the next few weeks.

Seasonality strength in pork prices were also supportive. Hog/corn ratios show continued incentive to contract the hog supply. Ratios are calculated by Dow Jones using industry-accepted fob cash hog prices and cash corn prices from private sources. Historically ratios at or above 20-1 for hogs (live basis) have resulted in expansion of production, while a ratio of 15-1 or less has resulted in contraction.


USDA put the pork cutout at $93.31/cwt; up $1.55/cwt but $1.67/cwt lower than last report. According to HedgersEdge.com, the average packer margin was lowered $0.20/head to a negative $2.90/head based on the average buy of $68.24/cwt vs. the average breakeven of $67.17/cwt. The latest CME lean hog index was placed at $94.98; up $0.16 and $0.78 lower than last report.

CORN futures on the Chicago Board of Trade (CBOT) finished down on Monday with the exception of deferreds December 2012 and beyond. The MAY’11 contract closed at $7.306/bu; down 23.25¢/bu and 31.75¢/bu lower than last week at this time. The DEC’11 contract closed at $6.612/bu; off 8.25¢/bu and 20.25¢/bu lower than last report.

Profit taking and improved planting weather weighed on prices. A weaker U.S. dollar was supportive in that a weaker dollar makes U.S. commodities more of a bargain for buyers using other currencies. Funds were balancing books on falling oil prices on the news of Osama bin Laden’s death by selling commodities. Exports were neutral.

Nearby corn contracts fell; most fueled by ideas that fund liquidation and export demand will slow limiting corn prices at or near all-time highs. Reports show that producers are planting night and day in the U.S. Midwest on the improved weather. Midwest corn producers try to have their corn planted by mid-May as yields can decline by about a bushel/day/acre for every day farms plant after the optimal planting period.

USDA put corn plantings at 13 per cent complete as of Sunday, off last year’s pace of 66 per cent complete this time last year and under the five-year average pace of 40 per cent for this time of year.

Traders worked on the general assumptions of 16 per cent planting progress. Two floor sources said the general thinking now is that producers can still plant 92.2 mi acres (the 2nd largest since 1944) despite early weather delays … and … if the weather continues to cooperate. Weather continues to heavily influence speculative price action. Speculators remained net long in CBOT corn futures for the week ended April 26, 2011.

USDA put corn-inspected-for-export at 34.635 mi bu vs. expectations for 31-36 mi bu. On another note, commodities seem unaffected by fears that potential retaliatory attacks the death of Osama bin Laden will cause much of a difference in grain trading. The general consensus among traders is that Bin Laden’s death will increase long-term stability in the Middle East. Improved weather and farmer planting progress is putting the pressure on prices.

There is still bullish support fundamentally for corn futures.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished down on Monday. The MAY’11 contract closed at $13.902/bu; off 2.5¢/bu but 0.75¢/bu higher than last Monday. NOV’11 soybean futures closed 0.5¢/bu higher than last Friday’s close at $13.736/bu and 8.75¢/bu lower than last report. Fund buying was supportive with funds increasing net long positions by 17,097 contracts. Exports were not supportive. USDA put soybeans-inspected-for-export at 5.525 mi bu vs. expectations for 10-15 mi bu. Soybean prices did make a session high of $14/bu but lacked upside momentum to push through chart resistance. The seeding pace of soybeans is not having the same price negative effect on soybeans as seen in corn futures because they are less critical at this stage of planting season.

Fundamentally U.S. soybean ending stocks will be at a historical low point for 2011 but the commodity is still seen as overvalued globally. Despite the low carryout projections for the U.S. soybeans, global supplies are unchanged from a year ago.

Cash soybeans were steady-to-firm at elevators amid slow farmer selling. Brazil’s 2010-11 crop is 95 per cent harvested vs. 97 per cent harvested this time last year with the yield forecast raised to a record 72.66 mi tonnes (2.67 bi bu), up from 70.56 mi tonnes (2.59 bi bu). Brazil harvested 68.5 mi tonnes (2.52 bi bu) in 2009-10.

USDA is scheduled to publish its World Agriculture Supply/Demand Estimates (WASDE) report on May 11. It is expected that exports will for both corn and soybeans will be lowered.

WHEAT futures in Chicago (CBOT) closed lower on Monday. The MAY’11 wheat contract closed at $7.596/bu; down 9.5¢/bu and $1.355/bu lower than last report. JULY’11 futures finished up 9.5¢/bu at $7.916/bu and 69.755¢/bu under last week. Floor sources said today wheat could never get much going in the pits while waiting on news from the 3-day crop tour of Kansas which begins on Tuesday. Additionally, traders took profits on recent high prices but these were limited by spillover weakness in corn futures. Some support came on weather news noting winter storms in Canada over the weekend damaging wheat fields in Alberta, Saskatchewan, and Manitoba. Exports were supportive with USDA putting wheat-inspected-for-export at 36.394 mi bu vs. expectations for 31-33 mi bu. India on Monday put off a decision to lift a ban on wheat exports saying the government will first need to take a look at requirements for a food security law to increase subsidized grain sales.

High global prices have encouraged Argentinean farmers to plant more wheat in 2011-12. Wheat output is expected to increase 20 per cent there. A Beunos Aires official, Pablo Adreani, head of of Agripac consultancy said it is expected that an additional 500,000 hectares (1.2 mi acres) will be planted to wheat. Wheat output is expected to be around 18 mi tonnes (661.4 mi bu); an increase of around 11.5 per cent for the upcoming wheat season.

Weather markets will continue to be the main price feature for wheat.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday. The MAY’11DA contract finished at $16.47/cwt; $0.06/cwt higher than last Friday’s close. JULY’11DA futures finished at $17.80/cwt; up $0.07/cwt over last report and $0.10/cwt higher than this time last week. Futures in the second half of the year show prices for the benchmark Class III futures contract average up $0.12/cwt.

The first half of 2012 looks like prices will be around $16.25/cwt; up $0.10/cwt. Support in the cheese market is providing support for Class III prices. Butter prices were steady with little volume or change. Cheddar production dropped in the first quarter of 2011 while other cheeses and butter were up strongly. Spot NDM saw no activity as traders wait for results from Tuesday’s GDT auction.

Cheddar production was down sharply for January-March 2011 while that of other cheeses remained strong. Last week, CWT accepted 5 bids to provide subsidies on exports of 844,000 lbs of cheese for delivery through July.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were off on Monday. The JUNE’11LC contract closed at $111.950/cwt, down $1.400/cwt. AUG’11LC futures closed at $114.525/cwt; down $1.175/cwt but $0.075/cwt over last report.

The DEC’11LC contract closed at $121.675/cwt; off $1.225/cwt but $0.375/cwt higher than this time last week. Profit taking, seasonality, and higher fuel prices continue to weigh on fat cattle futures. USDA put the choice cutout at $182.03/cwt; down $2.11/cwt and $4.46/cwt lower than this time last week.

Not enough cash sales were made to establish an adequate market but USDA put the 5-area-average at $116.76; $2.36/cwt lower than a week ago. The slowdown in slaughter last week was particularly bearish as it is seen as backing up cattle in feedlots when an increase in cattle reaching market weights is expected.

Futures selling increased near the close as funds bought August and sold June to move long positions to the deferred contract. According to HedgersEdge.com, the average packer margin was lowered $14.00/head to a negative $33.85/head based on the average buy of $117.55/cwt vs. the average breakeven of $114.84/cwt.

FEEDER CATTLE at the CME closed down on Monday with deferreds breaking even. The MAY’FC11 contract closed at $131.050/cwt; down $0.850/cwt but $1.075/cwt higher than a week ago.

The AUG’11FC contract settled at $134.825/cwt, down $1.125/cwt but $0.875/cwt over last report. Feeders were supported on lower grain prices. At the closely watched feeder cattle auction in Oklahoma City feeder steers were steady to 3.00/cwt over a week ago. Feeder numbers for Monday, May 2, 2011 were estimated at 8,200 head vs. 4,193 this time last week and 9,939 head this time a year ago. Cash feeders were $3/cwt higher while feeder heifers were steady-to-firm.

Stocker calves were $2.00/cwt higher amid good demand for feeders and weaned calves. The National Feeder & Stocker Cattle Summary for the week ended 4/29/2011 showed 172,400 head sold this week vs. 222,200 head last week, and 260,700 head this time last year. Feeders sold in direct trade were $1/cwt lower. Yearling feeder supplies are seen as tight for the next couple of months. The latest CME feeder cattle index was placed at $133.39; up $0.64 and $0.99 over last report.

[Mustang Sally Farm]

Friday, May 27, 2011
CME Daily Livestock Report
US - Reuters reported late Thursday (26 May) that the World Trade Organization has ruled against the US country-of-origin labelling (COOL) law that applies to, among other things, meat and chicken sold in retail stores, report Steve Meyer and Len Steiner.


The decision comes in response to a challenge filed in 2009 by Canada and Mexico that claimed that mandatory country-of-origin labeling (known as MCOOL) discriminates against foreign suppliers. The ruling was called “confidential” in the Reuters story which went on to state that a complete ruling would be issued later this year. The ruling may open the door to many more challenges of origin labeling laws around the world.

This ruling in no way means that MCOOL is dead. MCOOL is still the law of the land in the US and the WTO ruling does not change that law. It does, however, open the door for the complainants, Canada and Mexico, to eventually put punitive tariffs on US imports much the same way Mexico applied tariffs to a number of products coming from the US when a NAFTA panel found in its favor over US restrictions on Mexican trucks operating inside the US

MCOOL was originally passed as part of the 2002 Farm Bill. It was something of a consolation prize for a few Midwestern Senators who failed in their efforts to include a ban on packer ownership of livestock more than 14 days before slaughter in that piece of legislation. MCOOL was originally pushed by upper-Midwest cattle and beef groups who were upset about the number of cattle being imported from Canada and the practice of bringing Canadian beef carcasses into US processing plants and getting them graded with USDA quality and yield grades. MCOOL was generally supported by farm “activist” groups and those representing small farms. R-CALF USA was a leading proponent of MCOOL from the beginning. MCOOL was opposed by the National Cattleman’s Beef Association (NCBA) and the National Pork Producers Council (NPPC) as well as several other mainstream farm groups and virtually all packer and processor groups. Therein lies a bit of irony regarding potential punitive tariffs — US beef and pork are likely targets even though the primary groups representing US beef and pork production vehemently opposed MCOOL at virtually every turn.

After several delays and several changes, additions and clarifications in the 2008 Farm Bill, MCOOL was officially implemented on September 30, 2008. Imports of pigs from Canada have fallen from about 700,000 per month at that time to 450,000 to 500,000 per month now. Cattle imports from Canada have declined from around 150,000 per month in early 2008 to about 70,000 per month this year. The stronger Canadian dollar is also a key factor in these declines. Cattle imports from Mexico vary greatly from month to month but have shown no down-trend since MCOOL’s implementation. A chart of the monthly data appears on page 2.

 

[Mustang Sally Farm]

Wednesday, June 01, 2011
Pork Commentary: US Swine Industry Faces Major Profit Challenge
US - In this week's Pork Commentary, Jim Long writes about the US swine industry.


Jim Long is President &
CEO of Genesus Genetics.
US corn a bushel closed last Friday at $7.58. That is 80¢ a bushel higher than 3 weeks ago. Higher corn prices are making it very hard for producers purchasing their feed to make money. As we look out at Lean Hog Futures for the next year the average price is currently projected at around 85 cents lean per pound. At current feed prices below break even for most producers. Certainly it is not something to get all fired up with enthusiasm about.

The profit challenge can be seen in the average cash price of early weans $18.61 (13 – 26) and 40 pound feeder pigs $48.76 (41-60). We expect most early wean and feeder pig producers are losing about $20 per head at these prices. A couple of months ago cash small pig prices were $20 per head higher than contract small pigs. Contract early weans last week averaged $39.08 and 40 pound feeder pigs $70.13. It seems everyone gets a chance in the wheel barrow.


One positive last week was Iowa – S. Minnesota barrows and gilts average weight of 270.9 pounds similar to a year ago 270.8 pounds. For the last few months year over year weights averaged around 5 pounds greater than the previous year. Weights that have reached the same level is a positive as it reflects marketing’s are current. We probably pulled hogs ahead in the last few weeks getting weights down.


Let’s hope corn plantings get done soon and the crop gets going. The architects of the US corn ethanol programme should be happy if their vegetarians because the high feed prices are doing no favours for livestock and poultry producers.
COOL
It was reported last week the World Trade Organization ruled that US Country of Origin Labeling discriminates against foreign suppliers. At some point this means Canada – Mexico will have the legal right to put punitive tariffs on US imports. Large punitive tariffs on pork to Mexico and Canada would not be beneficial to US pork producers. In trade wars like all wars people get hurt. Hopefully some common sense will prevail and the US government will not be swayed by the R-Calf cattle lobby that has truly an inward mindset.

We talked to an aide of Senator Harkin of Iowa and several years ago. He told us COOL came out of the failure to get legislation to control packer ownership of hogs. Senators like Harkin were thrown the bone of COOL in late night negotiations. From what I gathered the implications of COOL had not been thought out. Now we have a legacy that is counterproductive.

What’s the most fearful sentence in the English language: “We are here from the Government and we are here to help!”

Chemical Castration of Pigs
Pfizer is putting on a big push to get the swine industry in the United States and Canada to consider using Improvac for chemical castration. They might be running into some road blocks as we have heard at least two of the major US packers have indicated they won’t purchase chemically castrated pigs.

We are glad to hear this but we fear the housewives of America will not be too keen to serve pork from chemically castrated pigs. How will this affect their children? Who knows but not eating it guarantees no problems. As an industry we can’t be playing defense again. We saw what H1N1 misnamed swine flu did to us. Why risk the chance. When all is said and done the cost of Improvac will only leave pennies in returns to the producer. Multinational drug company, Pfizer will be the winner not the producers of America. Thankfully some packers who are closer to the consumer recognize the danger to the pork industry.

Summary
Feed prices are pounding pork producer margins even though hog prices are strong. Lean hogs had reached $1.00 plus for the summer months and some producers took advantage to sell ahead at those prices.

PRESS RELEASE

WINNIPEG – GENESUS SHIPS LARGEST SINGLE ORDER OF BREEDING STOCK FROM CANADA TO CHINA – BUYER COFCO CORPORATION, CHINA’S LARGEST AGRIBUSINESS
Manitoba based Genesus Inc. shipped from Winnipeg Airport the largest single order from Canada to China of Registered Genesus Purebred Yorkshire, Landrace and Duroc Breeding Stock on Sunday May 29 to COFCO Corporation, China’s largest Agribusiness and Diversified Food Company.

The charter flight on China Cargo Airlines Boeing 747 had over 800 head of swine breeding stock were selected to fly directly to Wuhan, China.

COFCO is owner of 5 per cent of Smithfield Foods, the world's largest hog and pork producer.
COFCO is the major Chinese grain trading company.
Coca-Cola bottler China.
COFCO has more than 45,000 employees.
The attached press release acknowledges COFCO's intended US $588 million pig complex investment in Tianjin, China for 2 million live hogs per year.
“The COFCO contract is another step for Genesus as we grow our business. The agreement is a recognition of our Global genetic product and marketing efforts.” Mike Van Schepdael, Vice-President Genesus.

Genesus is the largest register of swine breeding stock in the world with markets in North and South America, Asia and Europe.


Author: Jim Long, President & CEO, Genesus Genetics

[Mustang Sally Farm]

Monday, June 06, 2011
Continued Poor Performance in US Economy
US - The US economy continues to perform poorly, reports Ron Plain in his latest weekly Hog Outlook report.
 
Ron Plain
Non-farm payrolls increased by only 54,000 jobs during May, the smallest increase in eight months. The unemployment rate increased from 9.0 per cent in April to 9.1 per cent in May. This is the highest unemployment rate since December. The livestock industry has cut production to boost prices so they can pay their record feed bills. Both retail beef and retail pork prices were record high in April. Unfortunately, a weak economy makes record meat prices very difficult to sustainable. Part of the economy's problem is high energy prices. The average price of gasoline in May was $3.96 per gallon, up 10.8 cents from April, up $1.07 from May 2010 and the third highest month ever.

Smithfield Foods has announced they have discontinued efforts to buy the remaining shares of Campofrio Food Group, a Spanish pork processor.

Cash hog prices were slightly lower this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $87.68/cwt, down 51 cents from last Friday. Neither the eastern corn belt, western corn belt nor Iowa-Minnesota had enough volume early this morning for a market report. On Thursday, the western corn belt was $4.31/cwt above the eastern corn belt. Friday's top live hog price at Peoria was $60/cwt. Zumbrota's top was $61/cwt. The top for interior Missouri hogs was $62.25/cwt, unchanged from the previous Friday. The pork cutout value declined for the second week in a row. USDA's Thursday afternoon calculated pork cutout value was $88.47/cwt, down $1.28 from the previous Thursday. Hams, butts, and bellies were lower, loins higher. This morning's national average hog carcass price equaled 99 per cent of the pork cutout value. That will keep downward pressure on hog prices.

Because Monday was Memorial Day, hog slaughter totaled only 1.746 million head this week, down 14.0 per cent from the week before and down 2.4 per cent compared to the same week last year. During the first 20 weeks of the year, sow slaughter was down 2.4 per cent. The number of Canadian sows imported for slaughter was down 17.9 per cent, leaving the slaughter of US sows up 0.9 per cent.

Barrow and gilt carcass weights for the week ending 21 May averaged 203 pounds, down 1 pound from a week earlier, but 2 pounds heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 269.9 pounds, down 1.0 pound from the week before and down 0.9 pounds compared to the same week last year. This is the first time Iowa-Minnesota weights have been below the year-earlier level since the week ending on 11 September 2010.

The June lean hog futures contract ended the week at $89.22/cwt, up 30 cents from the previous Friday. The July contract settled Friday at $87.95/cwt, down 65 for the week. August hogs settled at $89.45 and October closed at $83.90/cwt.

The July corn futures contract lost 4 cents this week to end at $7.54/bushel. September corn settled at $7.31.

[Mustang Sally Farm]

Thursday, June 09, 2011
WPX 2011: Asia Offers Opportunities for US Pork
US - Viet Nam is potentially a highly lucrative opportunity for US pork exports, the National Pork Producers Council said during the World Pork Expo.


However, for the market to open up non-scientific trade barriers based on spurious sanitary and phytosanitary arguments have to be removed.

The NPPC said that in the short term there is a potential to increase exports by $80 million and in the long term by about $600 million.

US exports are also being hit by other non-scientific barriers by countries such as Russia where trade has been blocked.

The NPPC vice president of international affairs Nick Giordano said that exporters are looking hard at the whole Asia market with further great potential in countries such as Malaysia - provided trade barriers can be overcome.

The Trans Pacific Partnership with Pacific Rim countries could establish a free trade agreement throughout South East Asian opening up trade possibilities through the region.

Already, the US has some FTAs with countries in the region but opening up the Vietnamese market could offer huge potential benefits for the US.

One of the major potential importers for US pork could be China, which while it is seeking self-sufficiency is facing a dilemma over the price of pork for its consumers and the supply of pork.

Mr Giordano said that while at present there is a dispute with China over labelling pork that needs to be settled, the Chinese market offers great potential because it will need to import more pig meat - and not just variety meats - in order to meet domestic demand.

"China and most of the Asian countries re not in a position to adequately produce pork on their own," said Mr Giordano.

"It is a tremendous opportunity for the US."

Mr Giordano said that opportunities in the Chinese market depended on the extent the Chinese government is willing to support the domestic industry, the availability and price of feed and whether it is more expedient for China to import to meet its needs than attempt to become completely self sufficient.

[Mustang Sally Farm]

Monday, June 13, 2011
April Pork Exports Lower but Remain Strong
US - Pork and beef exports slowed slightly in April when compared to the all-time record highs of the previous month, but still performed well above last year's pace.
 

April pork exports reached 181,109 metric tons valued at $487.8 million – up 16 per cent in volume and 22 per cent in value over last year.

On a cumulative basis through April, 2011 pork exports were 18 per cent ahead of last year’s pace in volume (735,294 metric tons) and 24 per cent higher in value ($1.87 billion).

Demand for US pork sizzling in North Asian markets
Japan remained the leading value market for US pork by a wide margin, with year-to-date exports up 17 per cent in both volume (163,775 metric tons) and value ($616.5 million). These increases are particularly impressive considering last year’s full-year export value record to Japan of more than $1.65 billion.

South Korea, which has seen its domestic pork production devastated this year by foot-and-mouth disease, had the sharpest growth in US pork demand for the first four months of 2011, with US exports to Korea up 187 per cent in volume (97,357 metric tons) and 245 per cent in value ($239.8 million). Exports to the China/Hong Kong region were also up impressively through April, increasing 38 per cent in volume (117,717 metric tons) and 26 per cent in value ($170.4 million).

Other pork market highlights for the first four months of 2011 include:

Exports to Canada were up 8 per cent in volume (62,268 metric tons) and 12 per cent in value ($212 million).
The Oceania region (Australia-New Zealand) continued to emerge as a strong growth market for US pork, increasing 29 per cent in volume (27,069 metric tons) and 72 per cent in value ($85.4 million).
Led by triple-digit growth in Chile, exports to Central and South America increased 24 per cent in volume (25,350 metric tons) and 34 per cent in value ($60.9 million).
Exports to Russia reached 21,508 metric tons valued at $61.4 million. This was more than double the volume and triple the value over the first four months of last year, though this is due in part to limited market access for US pork in early 2010.
Exports to Mexico – the leading volume destination for US pork – remain below last year’s record pace but still reached 173,647 metric tons valued at $321 million. The only market that is down significantly from last year is the ASEAN region, where exports have declined 40 per cent in volume (18,174 metric tons) and 29 per cent in value ($40.3 million). This is mainly due to lower totals to the Philippines, where exports reached a record high last year due in part to tight domestic supplies.

Pork exports equated to $56.99 per head in April, breaking the record of 56.52 set the previous month and jumping by more than $12 over April 2010. Exports were equivalent to 28 per cent of total US production in April and 27 per cent for the year so far –up from about 23.5 per cent a year ago.

Speaking from the World Pork Expo in Des Moines, USMEF Chair-elect Danita Rodibaugh, a pork producer from Rensselaer, Indiana, said US producers have a growing awareness of how important these figures are to their bottom line.

"Pork producers are really excited about our international opportunities,” she said. “When they see a return of almost $57 per head being returned to the farm and nearly 30 per cent of our production being exported, they understand and appreciate the value of the international marketplace. I sense a lot of excitement around that issue today."