American Hog News USDA

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New Compound Has Potential for Mycotoxin Control
US - Agricultural Research Service researchers have identified a compound that has potential to control the mycotoxin, fumonisin B1, which affects livestock and poultry.



A key bacterial compound that inhibits the growth of the plant pathogen, Fusarium verticillioides, has been identified by Agricultural Research Service (ARS) scientists. The compound could help protect plants, livestock and poultry from fusarium infection.

The compound is produced by Bacillus mojavensis strain RRC101. Finding better controls for F. verticillioides is important because fumonisin mycotoxins – especially fumonisin B1 – are toxic to livestock and poultry.



A compound produced by the bacterium Bacillus mojavensis, now identified as Leu7-surfactin, could help protect plants, livestock and poultry from fusarium infectionMicrobiologist and research leader, Charles Bacon, and his team at the ARS Toxicology and Mycotoxicology Research Unit in Athens, Ga., identified Leu7-surfactin as the inhibiting compound that controls F. verticillioides. The research team includes microbiologist Dorothy Hinton, chemist Maurice Snook and technician Trevor Mitchell. Their study was published in the April 2009 issue of the Journal of Agricultural and Food Chemistry.

B. mojavensis is a plant-residing bacterium that can be used to control fungal diseases in corn and other plants. Though B. mojavensis is known to work as a biocontrol agent, the specific substance responsible for inhibition of Fusarium was not identified until recently.

The Leu7-surfactin was isolated from growing the bacterium in liquid cultures. In lab tests, the compound proved effective in inhibiting growth of the fungus. Surfactin has a detergent-like activity that dissolves the lipid membranes inside the fungus, eventually killing it.

In Dr Bacon's tests, Leu7-surfactin was effective at controlling F. verticillioides at very low concentrations of 20 microgrammes per litre of liquid, making it more efficient to use. In addition to its antibiotic effects, surfactin can be used in textile manufacturing, environmental remediation, and fossil fuel recovery. This compound's properties create great potential for biotechnological and biopharmaceutical applications.

Dr Bacon and his colleagues examined all currently available strains of B. mojavensis and found that all of the strains are endophytic, i.e. living within the plant, and all were active against F. verticillioides and other fungi in lab tests. The genus Bacillus is known for the production of more than 24 antibiotics, several of which are fungicidal with the potential to control plant diseases.

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CME: No Reductions in Breeding and Market Herds
US - According to CME's Daily Livestock Report for 25 June, many observers of what a journalist called “the hog mess” in a phone call this week may be wondering just why the much discussed pre-report expectations do not indicate more reductions in US swine breeding and market herds.



For reasons that we think you will see momentarily, we begin our discussion of the subject with the chart below. Recall that, according to Iowa State University’s Estimated Costs and Returns, in August 2007 the US pork industry had just enjoyed its longest string of profitable months ever. Iowa farrow-to-finish operations, on average, made money for 35 straight months from February 2004 through December 2006. After a loss of $0.60/head on sales in January 2007, these operations returned to profitability for another 8 months before losses began in October 2007. That’s 43 of 44 months profitable at an average rate of just under $20/head. Producers, to say the least, became quite well-healed with some having no operating debt and very little long term debt and the entire segment reaching an estimated 75-80 per cent equity. Bankers could find very few who needed to borrow money.


Since then, to use a baseball analogy, producers are batting 0.100 — 2 for 20. And as can be seen from the chart, the two “hits” they did get last summer were the equivalent of bloop singles Three other months might be classified as infield outs but the rest of the months since September 2007 have been strike-outs –perhaps not of producers doing but strikeouts nonetheless. (We apologize now to our international readers since we have no idea how to make a soccer/football/futbol analogy for this situation. Bu we may learn after the US’s stunning upset of world #1 Spain on Wednesday — aren’t you impressed that we even KNEW about that?) . But we digress.

The string of profitable months explains a great deal of US producers’ delay in reducing output — they had money and they thought they could weather the financial storm, especially after exports in 2008 caused the storm to lull, providing what in hindsight appears to be a very false sense of security. In addition, Lean Hogs futures spent much of the past 4 years constantly telling producers that prices were going to get better. And many producers took advantage of those higher futures prices to avoid much of the cash market losses depicted in the chart above. Another reason for the here-to-fore lack of action.

But the two events at right now demand action. The top graph (similar to one used in the June 10 edition of DLR) shows the dramatic jump in slaughter of US born pigs in the fall of 2007. It coincides perfectly with the introduction of circovirus vaccines in the summer of 2007. The 11.9 per cent figure represents the difference of the average for Q4-2007 to date versus Q4-2003 through Q3-2007. The bottom graph shows the almostsimultaneous increase in production costs, driven primarily by the increased use of corn for ethanol. The average breakeven cost in the ISU estimates for 2007 to date is $69.56/cwt. carcass weight, 30.7 per cent higher than the average of $53.22/cwt carcass for 1998 through 2006.


Producers’ response through March had been to reduce the breeding by only 3.6 per cent — nowhere near enough to offset the downward pressure of more pigs on prices and the need, whose long-term status is now clear, for higher prices to cover higher costs. It may not have started by 1 June but it is likely underway now.

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US Pork Outlook Report - June 2009
By USDA, Economic Research Service - This article is an extract from the June 2009 issue of Livestock, Dairy and Poultry Outlook Report.

 

Highlights
Higher expected feed prices and relatively weak hog prices in 2010 should result in 2010 pork production of 22.3 billion pounds, down 1.8 per cent. In the face of relatively weak hog prices and higher feed prices, producers are expected to hold down growth in hog weights.

Pork Production To Fall in 2010
Projected pork production for 2009 was increased from last month. Higher slaughter weights in the second quarter have boosted the production forecast in that quarter, which more than offsets the reduced second half forecast. Imports of hogs are forecast lower as higher feed prices and relatively weak US hog prices reduce producer returns and, coupled with a weaker US dollar, reduce incentives to import hogs. For 2009, pork production is forecast at 22.7 billion pounds, down 2.6 per cent from 2008.

Higher expected feed prices and relatively weak hog prices in 2010 should result in 2010 pork production of 22.3 billion pounds, down 1.8 per cent. In the face of relatively weak hog prices and higher feed prices, producers are expected to hold down growth in hog weights. Imports of hogs are forecast lower as weak returns limit producer incentives to feed out Canadian hogs. The Quarterly Hogs and Pigs report, to be released on 26 June, will provide a better indication of producer farrowing intentions through the end of 2009.

Weak pork demand is pressuring hog and pork prices. The National Base Lean hog price for the second quarter is forecast at $43 to $44 dollars per hundredweight (cwt; live equivalent), about 17 per cent below 2008. Prices will likely rise seasonally in the third quarter but as slaughter increases further in the fourth quarter, prices will drop back to the low $40s. As supplies tighten in line with slaughter reductions and little increase in carcass weights, hog prices are expected to increase. For 2010, the National Base Lean hog price (live equivalent) is forecast to average $48 to $51 per cwt.

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Weekly Review: Slaughter Close to a Year Ago
US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.


The trade estimates for the 1 July Hogs and Pigs report are for the total herd to be down 1.9 per cent, breeding herd down 2.4 per cent and the market herd down 2 per cent. Slaughter along with weights of current market hogs suggest the market herd on 1 March was underestimated. Slaughter in recent weeks has been very close to a year earlier.

The live weights of barrows and gilts for Iowa-Minnesota for the four-week period ending June 20 averaged 5.2 pounds per head above a year earlier. The average carcass weight for barrows and gilts under Federal Inspection was five pounds per head above a year earlier for the last four week data available. These data indicate marketings are at least two and possibly three days less current than they were at this time last year.

Early weaned pigs and all feeder pigs were $2-3 per head lower last week. Pigs estimated at 50-54 percent lean, early weaned, ten-pound-basis were $26.47 per head, 40-pound-basis pigs estimated at 50-54 percent lean were $25.41 per head. The reason why early weaned pigs are higher than 40-pound pigs is that they had a higher percentage of the pigs with a formula price.

Pork product cutout per 100 pounds of carcass Thursday afternoon at $54.86 per cwt was down $0.72 per cwt from a week earlier. Loins at $71.76 per cwt were up $0.04 per cwt, Boston butts at $70.21 per cwt were up $2.07 per cwt, hams at $34.47 per cwt were down $3.19 per cwt and bellies at $62.81 per cwt were down $0.41 per cwt compared to seven days earlier.

Demand for live hogs is down this year to date because of smaller pork exports, but pork demand domestically is believed to be up a little from last year.

Live hog prices Friday morning were steady to $2.00 per cwt higher compared to a week earlier. Weighted average carcass negotiated prices Friday morning were $1.39 lower to $2.51 per cwt higher compared to seven days earlier. The top live prices for select markets were: Peoria $35.50 per cwt, Zumbrota, Minnesota, $37 per cwt and interior Missouri $40.00 per cwt.

The weighted average negotiated carcass prices by area were: western Cornbelt $55.04 per cwt, eastern Cornbelt $55.19 per cwt, Iowa-Minnesota $55.18 per cwt, and nation $55.16 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,032 thousand head, down 5 per cent from the same week in 2008.

The June 1 Hogs and Pigs report came in very close to trade expectations. The trade expected the total herd to be down 1.9 per cent, USDA estimate is two per cent; market herd trade estimate down two per cent, USDA down 1.9 per cent; the trade estimate for breeding herd was down 2.4 per cent, USDA down 2.7 per cent.

We believe the market inventory needs to be looked at with some concern. Slaughter in the second quarter was substantially larger then indicated by the March inventories.

Marketings during the third and fourth quarters are expected to be down three percent or a little more based on the 1 June inventories. These levels of slaughter would probably result in prices in the low to mid-40s for live 51-52 per cent lean hogs.

A more detailed summary will be on AgEBB by noon 29 June.

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H1N1 Has Hit Pig Farmers Hard
MASSACHUSETTS, US - A report of how one the business of two pig farmers in the state has suffered in the wake of the H1N1 flu crisis.



Pig farming: As a profession, it is uniquely unglamorous, according to MassLive. Yet, it has a long and honorable tradition, and on the Earle M. Parsons & Sons' farm in Hadley, the tradition is especially long. After all, a Parsons was among the first settlers of Northampton, and there's been a Parsons farming in the area for 12 generations.

The farm also had a profitable tradition until late April, when a flu virus emerged in Mexico that was quickly dubbed the swine flu. Across the world, as the strain spread, the situation rapidly became a pig or hog farmer's worst nightmare.

"Due to the overreaction, the pork market took quite a dive for several days after it hit the press. And, it hasn't come back yet," said Matthew J. Parsons, a partner with his cousin Earle in the farm, which sells about 2,500 pigs a year. A hog is generally thought of as a pig of more than 120 pounds, and the Parsons family markets most of their pigs before they reach 100 pounds.

"The price had been about 67 cents a pound, but it went down into the 30s. Wholesalers were nervous that consumers would not purchase pork, so they did not purchase as much nationwide," he said.

Pork prices have since recovered some, but they are still 10 to 15 percent below the level prior to the flu outbreak. Prices are also down because of the poor economy, which has reduced demand for pork products. Initial fears that the flu would prove to be the deadly global pandemic that had been predicted for years were not borne out. In fact, the swine flu has been milder than many other flu strains that regularly appear during the flu season, and it has produced fewer deaths.

In a typical flu season in the United States, 36,000 people die from influenza or its complications, according to the US Centers for Disease Control. As of 25 June, the swine flu, formally named H1N1, had sickened nearly 28,000 people in the United States, including nearly 1,300 cases in Massachusetts, and it had been linked to 127 deaths nationwide.

Michael A. Cahill, the director of the Division of Animal Health for the state Department of Agricultural Resources, told MassLive it was unfortunate that the virus took on the name swine flu.

"It's not appropriate," Mr Cahill said. "I don't know who named it, but shortly after that, it was renamed H1N1. There are pieces of the virus ... that resemble other kinds of flu, and there is also a human influence in the virus. But there is zero connection to pig farming whatsoever, even in Mexico."

"For consumers, there is really no risk," Mr Cahill added. "Just like any meat, pork needs to be handled appropriately and cooked appropriately. But, the flu virus couldn't be transmitted that way."

Pig farming is certainly not big business in the Pioneer Valley, which, with its generally rich soil, is better known for its crops, from tobacco and sweet corn to squash and asparagus. But livestock farming has a place here, especially on land that is not great for planting, such as on rocky hillsides or in locations where the soil drains poorly.

Throughout the US in 2008, there were 66.8 million hogs and pigs raised, according to the US Department of Agriculture. In Massachusetts, there were about 10,000 head raised.

Wayne E. Walton and his wife Monica operate the Carl Popielarz Pig Farm in South Hadley. They are the fourth generation in the family to do so. They raise about 250 pigs a year, typically selling them to a slaughterhouse in upstate New York. Their pigs take about two months to reach marketable weight, going from around a pound at birth to 40 pounds when they're sold.

"I've been doing this for the past six years. I took over my grandfather's pig farm, which has been in the family for 86 years," Mr Walton told MassLive. "It's constant work, but I have a lot of help."

Mr Walton may be the definition of a workaholic. He's at the farm at 05:30 in the morning, doing chores. Then he goes to his full-time job with the South Hadley Water Department. In addition, he has an excavation business, which he said is the major source of his income.

"The only thing I know how to do is work," he said. "The work on the farm is cleaning and feeding for the most part. The feeding is usually about a two-hour process. Then you have to clean the pens. Then you may have to do things like repair fences. But most of the time, I find it pretty enjoyable."

Pigs have a reputation for being ornery [cantankerous], but from his experience it's undeserved, Mr Walton said. "They're very good-natured."

However, their reputation for questionable table manners is deserved. Indeed, he said, they eat like pigs. "Absolutely. Just like a pig, they chew with their mouths open."

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New Theory: Flu Virus May Have Come from Asia
US - Officials now believe that the influenza A/H1N1 virus may have emerged in pigs in Asia and travelled to North America in a person.



Contrary to the popular assumption that the new swine flu pandemic arose on factory farms in Mexico, federal agriculture officials now believe that it most likely emerged in pigs in Asia but then travelled to North America in a human, according to New York Times.

But they emphasised that there was no way to prove their theory and only sketchy data underpinning it.

There is no evidence that this new virus, which combines Eurasian and North American genes, has ever circulated in North American pigs, while there is tantalising evidence that a closely related 'sister virus' has circulated in Asia.

American breeding pigs, possibly carrying North American swine flu, are frequently exported to Asia, where the flu could have combined with Asian strains. But because of disease quarantines that make it hard to import Asian pigs, experts said, it is unlikely that a pig brought the new strain back West.

"The most likely scenario is that it came over in the mammalian species that moves most freely around the world," said Dr Amy L. Vincent, a swine flu specialist at the Agriculture Department's laboratory in Ames, Iowa, referring, of course, to people.

The first person to carry the flu to North America from Asia, assuming that is what happened, has never been found and never will be, because people stop carrying the virus when they get better.

Moreover, the officials said, the chances of proving their theory are diminishing as the virus infects more people globally. It has now reached more than 90 countries, according to the World Health Organization. Since some of those people will inevitably spread it to pigs, its history will become impossible to trace.

"To tell whether a pig is newly infected by a human or had the virus before the human epidemic began really can't be done," Dr Kelly M. Lager, another Agriculture Department swine disease expert, told New York Times.

The highly unusual virus – which includes genetic bits of North American human, avian and swine flus and Eurasian swine flu – has not been detected in any pigs except those in a single herd in Canada that was found infected in late April.

A carpenter who worked on the farm after visiting Mexico had been thought to have infected the herd. But in mid-June, Canadian health agencies said he was not to blame. The whole herd was culled, and the virus has not been found elsewhere in Canada, as it would have been if it were endemic, since American and Canadian laboratories test thousands of flu samples to help the pork industry develop vaccines.

But a sample taken from a pig in Hong Kong in 2004 was recently found to have a virus nearly matching the new flu. That flu, which had seven of the new flu's eight genome sequences, was noted in an article in Nature magazine on 11 June, which called it a 'sister virus'.

Scientists tracking the virus's lineage have complained that there is far too little global surveillance of flu in swine. Public databases have 10 times as many human and avian flu sequences as they do porcine ones, said Dr Michael W. Shaw, a scientist in the flu division of the Centers for Disease Control and Prevention, and there are far fewer pig flu sequences from Asia than from North America and Europe, and virtually none from South America or Africa.

"Something could have been going on there for a long time and we wouldn't know," Dr Shaw told New York Times.

But national veterinary officials said they knew of no close relatives of the new virus in the large private North American databases, either. That makes it most likely, they said, that it has been circulating in Asia.

The new virus was first isolated in late April by American and Canadian laboratories from samples taken from people with flu in Mexico, Southern California and Texas. Soon the earliest known human case was traced to a five-year-old boy in La Gloria, Mexico, a rural town in Veracruz.

Because that area is home to hog-fattening operations with thousands of pigs, opponents of factory farming were quick to blame the industry.

In May, the Mexican government said it had tested pigs on the Veracruz farms and found them free of the virus. Smithfield Foods, an owner of the farms, and the National Pork Producers Council, the industry's lobbying arm, were quick to publicise that announcement.

But outside veterinary experts still disagree on whether those tests proved anything.

According to Smithfield, Mexican government veterinarians tested snout swabs taken on 30 April and blood samples stored since January.

But since the human outbreak in Veracruz is believed to have started in February, many veterinary experts said testing pig snouts for live virus in April proved nothing. Any pig sick in February would have long since recovered and, since hogs are usually slaughtered at six months old, many of those alive in early February would be bacon by April.

Dr Greg Stevenson, an expert in swine diagnostics at Iowa State University told New York Times that since flu could persist in a large herd for months, "if it had been there in February, it would probably still be there at the end of April".

The blood tests – in which scientists look for antibodies formed in response to a previous infection – present a different set of problems. Antibodies are much harder to tell apart from one another than viruses are.

A pig that had the new H1N1 flu would come up positive on an antibody test. But so would a pig that had the regular H1N1 swine flu that has circulated since 1930, or even a pig that had been vaccinated against the earlier H1N1 flu – and all the Smithfield pigs routinely get flu shots.

The company said vaccinated pigs could be distinguished from previously ill pigs because illness produced more antibodies.

But outside experts were sceptical. An antibody test specific enough to identify only the new flu strain "would take months to develop, at a minimum, and would require considerable R"D expertise and technology," said Dr Christopher W. Olsen, a swine flu expert at the University of Wisconsin's veterinary medical school.

The governor of Veracruz has asked the National Autonomous University of Mexico to do its own investigation of industrial hog farming in his state; the work is expected to take months. Carlos Arias, the biochemist leading the team, told New York Times he hoped to test all the swab and tissue samples stored by the farms and the national veterinary laboratory.


 

[mikey]

Swine Industry Continues to Retract
US - The US swine industry continued on its course of retraction in the first half of this year, writes Shane Ellis.

A year ago, it appeared that things could be turning around for the swine industry. Hog prices were up, domestic demand was strong and exports were growing at an unprecedented pace. There was optimism that despite extremely expensive feed producers would once again regain see some profitability. But after hog prices tumbles from record highs last fall there has been a very apparent need for more reduction in pork supply to even up with weaker demand. From the June Hog and Pig report it is apparent that the retraction continues and hog supplies are starting to decline. The US hog industry has reduced June sow inventories to their second lowest level on record, the lowest being in 2005. While year over year sow numbers have been declining for the past 15 months, market hog numbers have only declined in the past nine.

The US swine breeding herd now numbers 5.97 million head, down 2.7 per cent from last year. Market hog numbers are down 1.9 per cent to 60.1 million head. Total hog numbers are down two per cent from a year ago at just over 66 million head. Farrowing intentions for the next quarter are down more than three per cent, showing producer plans of continued thinning the sow inventories. Forth quarter farrowing are also expected to be down more than two per cent. While the hogs from the first quarter pig crop are currently in the slaughter supply, fall hog slaughter will be similar to the levels of a year ago. Pig supplies have not declined as rapidly as the number of sows in part due to ever improving litter sizes which are 2.5 per cent larger than a year ago. This improvement in efficiency decreases costs per pig and is a tribute to improved animal management, it has offset much of the needed reduction in production capacity. Table 1 summarises the recent swine report for national and Iowa inventories.


In Iowa, the reduction in sow numbers has been much more pronounced, with a 5.6 per cent reduction in sow numbers from a year ago. There are now slightly more than one million breeding swine in the state. Iowa farrowing intentions are down nearly six per cent for the next two quarters. The total number of market hogs in the state has increased 1.4 per cent from a year ago as the state continues to import feeder pigs. However the number of light weight pigs (<60lbs.) is down nearly one per cent. This is an early and albeit weak signal that the number of market hogs being fed may be starting to decline. With the production cost advantage that the state has, Iowa will be one of the last states to see a reduction in the number of hogs finished.

The hog market has been very slowly improving, slowly stepping producers up from the record large losses seen at the beginning of the year. Still losses are in the double digits and the badly needed improvement in hog prices does not appear to be in the near future. Usually during June there is a strong bull market for hogs, but any upturn in prices was much weaker than hoped or anticipated a few months ago. The appearance of the H1N1 virus with its misnomer 'swine flu', weaker than expected exports and a continuing global recession have dampened not only the upturn in prices but also hopes of any improvements for the rest of the year. Eight months ago, there were opportunities to hedge a hog-to-corn margin that would have put a hog producer in the black, but such opportunities do not appear to be available in the near future.

Table 2 contains the ISU and futures market forecast for live hog prices in the next four quarters, along with a forecast for domestic pork supplies. While the number of market hogs available is declining, remember that domestic supply is impacted by the amount of product being exported. Pork exports are down more than 11 per cent this year compared to last. When previously 20 per cent of last year's supply was exported and now more than a tenth of that will remain in the domestic supply, a two per cent reduction in market hogs is quickly mitigated. Hog slaughter weights are also up (an average 3 to 4 lbs) from a year ago. This is due partially due to the more temperate weather of the last spring and producers holding their hogs just a little bit longer in hopes that the expected summer price rally would come.


Additional market information will be available in the July Iowa Farm Outlook newsletter to be released July 1. In addition a new hog margin decision aid will be presented.

[mikey]

Weekly Roberts Report
US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.



LEAN HOGS on the CME were mixed on Monday. JULY'09LH futures closed at $58.025/cwt; up $1.325/cwt but $2.425/cwt lower than this time last week. AUG'09LH futures were up $0.925/cwt at $58.625/cwt but $2.225/cwt lower than last report. The DE'09LH contract fell $0.525/cwt to $55.325/cwt. Bull spreads in the July/December and the October/February were the plays for the day. In addition, several floor sources said today’s gains were the result of short covering in contracts that had taken a beating recently on slow pork sales and weak cash prices. USDA's Hogs and Pigs report last Friday was viewed as bearish. Deferreds are pressured by the slower-than-expected pace of herd liquidation. USDA put the June 1, US swine herd at 98 per cent of a year ago or 66.079 million head. The breeding herd was reduced only 3 per cent to 5.967 mi head but higher pigs-per-litter numbers at 102 per cent of a year ago offset previous expectations for lower hogs-to-market. USDA on Friday put the average pork cash price at $55.28/cwt, up $0.42/cwt. Packer demand is expected to slack off due to the Friday holiday and ample hog supplies. USDA on Monday placed the average pork cutout at $55.77/cwt, up $0.49/cwt. According to HedgersEdge.com, the average pork plant margin declined another $2.10/head from this time last week to a negative $7.75/head. This was based on the average buy of $41.90/cwt vs. the average breakeven price of $39.03/cwt. The latest CME Lean Hog Index was placed at $59.03/lb, up $0.09/lb and $1.00/lb higher than a week ago. It would be a good idea to sell hogs when ready.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) gained on short covering and buy stops Monday. The AUG'09LC contract closed up $2.150/cwt at $84.625/cwt; $1.775/cwt higher than this time last week. DEC'09LC futures closed at $90.250/cwt; up $1.575/cwt and $2.425/cwt higher than last report. Action was brisk with approximately 400 limit-up bids unfilled in the August contract at the close. Early buying sparked the advance and fueled fast action at times, according to floor sources. Beef demand looks better with slaughter still up placed at 130,000 head last week vs. 127,000 this time last year. Cash cattle prices were level with last week’s trade and several traders said they expect them to strengthen going against the seasonal slump in beef prices. However, tight supplies on negative producer margins have decreased stocks. Packers may pick up the buying pace this week to keep processing lines full but the shortened processing week may keep the lid on. USDA's 5-area price average was placed at $81.63/cwt. Early Monday USDA put the Choice Boxed Beef cutout at $139.38/cwt, up $0.45/cwt but $1.71/cwt lower than a week ago. A beef recall of 421,000 lbs did not seem to affect trading. According to HedgersEdge.com average packer margins were raised $4.85/head to a positive $13.55/head based on the average buy of $81.51/cwt vs. the average breakeven of $82.57/cwt. It is still a good idea to hold cattle to heavier weights if you can. If you need corn now is good time to buy near-term needs.

FEEDER CATTLE at the CME rose sharply on Monday. AUG'09FC futures finished at $101.725/cwt; up $2.750/cwt and $2.800/cwt higher than last report. The OCT'09FC contract closed at $101.325/cwt; up $2.750/cwt and $2.275/cwt higher than this time last week. Live cattle and lower feed costs on top of short covering and buy-stops were very supportive. October/January bull spreads were noted. The latest CME Feeder Cattle Index was placed at $97.67/cwt, up $0.44/cwt and $1.30/cwt higher than a week ago. It is a very good idea to move feeders when ready.

CORN futures on the Chicago Board of Trade (CBOT) were down on Monday. The JULY'09 contract closed at $3.770/bu; off 7.2¢/bu and 8.25¢/bu lower than last Monday. DEC'09 corn futures finished at $3.972/bu; down 7.0¢/bu and 8.2¢/bu under last report. Good growing weather, lower-than-expected exports, and large speculators backing off bullish positions pressured prices. USDA put corn-inspected-for-export at 27.667 mi bu vs. expectations between 30.0-35.0 mi bu. This was 14.935 mi bu off last week’s pace. Traders were adjusting positions prior to Tuesday's USDA June-plantings and quarterly stocks report. Average estimates for corn seedings were placed at 84.158 mi acres vs. USDA's March report at 84.986 mi acres. Cash corn bids were weaker amid slow farmer selling. USDA rated the US corn crop at 72 per cent good-to-excellent condition. The market expected a 68 per cent-70 per cent rating as several floor sources said this time of year crop condition starts to drop. Funds sold about 4,000 contracts as large speculators decreased net bull positions in CBOT corn. Hopefully up to 60-70 per cent of the '09 crop has been priced. It would be good to consider selling another 10 per cent bringing the ’09 crop to 70-80 per cent sold. Corn continues to submit to seasonal declines.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were down on Monday with the exception of the July contract. The JULY’09 contract closed up 14.0¢/bu at $12.15/bu and 63.75¢/bu over last report. The NOV'09 contract closed at $9.834/bu; off 7.5¢/bu but 2.5¢/bu higher than Monday. Bull spreads in the July/August on tight supplies were supportive while good crop weather, expectations that USDA will lift soybean acres, and so-so exports held prices back. Trade expectations for soy-planted acres average 78.305 mi acres, up 2.281 million acres from the March estimate. USDA put soybeans-inspected-for-export at 12.934 mi bu versus trade expectations between 10.0-15.0 mi bu. Cash soybeans were steady-to-firm amid slow grower sales. Funds sold 2,000 lots while large speculators sold right at 4,000 contracts. If you didn't get the '09 crop priced to 70 per cent, now is a good time. If you have beans left in the bin, it would be a good to consider selling them.

WHEAT futures in Chicago (CBOT) were down again on Monday. JULY'09 wheat futures finished off 5.75¢/bu at $5.284/bu; 17.75¢/bu lower than last report. The SEPT'09 wheat contract closed at $5.576/bu; off 5.25¢/bu and 17.5¢/bu lower than this time last Monday. Heavy global stocks, sluggish exports, and harvest activity weighed on prices. USDA put wheat-inspected-for-export at 10.126 mi bu vs. estimates between 13.0-17.0 mi bu. Harvest progress was placed at 36 per cent vs. the five-year average of 46 per cent and 45 per cent of the U.S. wheat crop was rated good-to-excellent. Funds and large speculators increased bearish positions. It would be a good idea to finish pricing the '09 crop at this time.

[mikey]

Livestock Transport Standards Being Developed
US - American Humane Certified is to develop humane livestock transport standards.



The US's leading animal welfare monitoring and humane-labelling programme for food products – American Humane® Certified – will convene a panel of experts in animal handling, animal science, veterinary medicine and transportation equipment manufacturing to develop improved welfare standards for design, technology and monitoring of livestock transportation. American livestock transportation equipment that meets the standards will be recognised with the American Humane Gold Award.

American Humane Certified will begin monitoring the research and testing of a new humanely designed trailer, recently introduced at the World Pork Expo in Des Moines, Iowa. Advanced Livestock Transport (ALT), a new USA livestock trailer company, has imported its first trailer into the United States from trailer manufacturer Castañe of Spain, for introduction to the American pork industry, as well as other species that are transported by truck. ALT is the first transport company to sell equipment in North America that complies with European Union (EU) regulations on animal welfare.

The research on the ALT trailer will be conducted by Texas Tech University, under the direction of Professor John McGlone. Among data to be tracked are the rates of dead on arrival, and non-ambulatory and non-injured pigs compared to other transportation equipment designs. ALT has engineered temperature controls designed to reduce the rate of dead and downed pigs. The trailer also has increased floor space to be able to provide science-based space allowances and an elevator that eliminates the need for ramps. The trailer includes on-board GPS tracking, and temperature and video monitoring of animals during transport. The early research is expected to be completed by late 2009.

The certification of transportation equipment is a reintroduction of American Humane's historic Gold Award for humanely designed transportation equipment. It was first awarded in 1887 to the A.C. Mather Co. for its improved cattle rail car. Over the decades, American Humane has worked closely with the livestock and transportation industries to develop humane methods and equipment that improve animal welfare during transport.

"American Humane has been involved in creating more humane conditions for animals in transport since our founding in 1877," said Tim Amlaw, director of American Humane Certified. "It is fitting that we revisit our legacy and once again recognize humane practices in the transportation of livestock."

[mikey]

US Swine Economics Report
US - USDA's latest survey of the US swine herd said the market herd was down 1.9 per cent on 1 June and the breeding herd was down 2.7 per cent compared to 12 months earlier, writes Ron Plain in his Swine Economics Report.

 
Ron Plain
The total inventory of hogs was down 2.0 per cent. The breeding inventory was smaller and the market hog inventory was a bit larger than the average of trade forecasts.

USDA said March-May farrowings were down 2.7 per cent and forecast June-August farrowings to be down 3.3 per cent and September-November farrowings to be down 2.2 per cent. Pre-release trade estimates put March-May farrowings at down 2.7 per cent, forecast June-August to be down 3.3 per cent and September-November down 2.5 per cent.

Pigs per litter in the March-May quarter averaged a record 9.61 head, up 2.5 per cent compared to a year earlier, and the 23rd consecutive quarter above year-ago levels. The last four quarters have averaged 2.45 per cent more pigs per litter, offsetting much of the decline in farrowings.

Perhaps the most interesting numbers in the June report are the young pig inventories. USDA says the June inventory of pigs weighing less than 60 pounds was 2.4 per cent below year-earlier levels, but the March-May pig crop was only down 0.3 per cent. Imports of feeder pigs from Canada were down 25 per cent during March-May. Thus, Canada accounted for 90 per cent of the drop in our inventory of light weight pigs.

USDA said the inventory of market hogs weighing 60-179 pounds was down 2.2 per cent on 1 June. If correct, daily hog slaughter during the third quarter should be down 2.2 per cent plus the drop in slaughter hogs from Canada. Look for hog slaughter during July-September to average at least 3 per cent lower than last year with carcass hog prices averaging in the mid to upper $50s.

USDA said the inventory of market hogs weighing less than 60 pounds was down 2.4 per cent on 1 June, implying hog slaughter during the fourth quarter of 2009 will be down roughly 3 per cent given the sharp downward trend in hog imports from Canada. I expect fourth quarter carcass hog prices to average in the low to mid $50s.

Hog slaughter will be down 3-4 per cent this year and hopefully even more in 2010. Unfortunately, there is no end in sight to the string of financial losses plaguing producers.

[mikey]

Small US Slaughterhouses Continue to Decline
US - A new report issued today by Food & Water Watch examines how the slow demise of local small slaughter and processing operations in the United States is preventing farmers and ranchers from fully satisfying rising consumer demand for meat from sustainably raised livestock.



Entitled Where’s the Local Beef?, the report identifies the reasons for the disappearance of small plants, presents examples of the next generation of processors and offers policy solutions to rebuild the small slaughterhouse sector of the meat industry.

“The decline of small slaughter and processing operations in the U.S. is part of a general trend in agriculture toward the industrial model of food production,” said Wenonah Hauter, executive director of Food & Water Watch. “A variety of public policies, including USDA food safety regulations, economic development programs and rules governing livestock markets must change in order to level the playing field for small meat plants.”


Key findings of the report include
Small slaughter and processing operations have been closing across the country because of industry consolidation, low profit margins, the complexities of federal regulation and difficulty disposing of slaughter byproduct.
Small slaughter operators are expected to adhere to a regulatory framework that is biased toward large, corporate facilities that can afford the expensive techniques and equipment now incorporated into government inspection requirements.
Changes to USDA’s meat inspection program to help rebuild local meat processing infrastructure that include providing resources for small plants such as generic food safety plans, performing microbiological testing based on the volume of production and conducting investigations to find the source of contamination when it is first detected at small plants that do not slaughter animals.
“Despite the odds stacked against them, some small slaughterhouses and processors are finding ways to survive,” said Hauter. “It’s time for USDA and other government agencies to make sure that their policies work for more than just the largest players in the meat industry.”

[mikey]

Market Preview: No Relief in Pig Crop Report
US - Weekly US Market Preview provided by Steve R. Meyer, Ph.D., Paragon Economics, Inc.



Last Friday's Quarterly Hogs and Pigs Report did little to allay fears that the North American pork industry is in for another year of economic difficulty. As has been the story in most recent reports, any reductions of productive capacity being made by U.S. producers are being almost simultaneously offset by rising productivity.

The key numbers from the USDA report appear in Table 1. Note that virtually all of the numbers are very close to analysts' pre-report estimates, published last week per a survey by DowJones. Anything within 1 per cent is usually deemed "as expected" and likely to be neutral for Lean Hogs futures. Early trading on Monday indicates that the market was a bit surprised by the size of the fall pig crop (down only 0.1 per cent) and somewhat disappointed that the breeding herd was not lower – even though I don't know how current data could have suggested a significantly lower breeding herd.


The only numbers that were a bit of a surprise relative to expectations were the 180-lb.-plus inventory figure at 99.9 per cent of last year and the March-May average litter size of 9.61 pigs, up 2.5 per cent from last year.

I was not surprised at all by the 180-plus number since it agrees quite well with June slaughter after adjusting for fewer Canadian market hogs. I thought the average pre-report estimate was low all along as it did not agree with June slaughter.

Litter Size Continues to Climb
The magnitude of the growth in litter size has been truly amazing over the past two years. Figure 1 shows average litter size on a quarterly basis from 1984 to present. As can be seen, the past eight quarters have seen the fastest growth on record, rivaled only by litter size growth in 1994 through 1997. The difference in these two time periods, of course, is that the mid-90s growth was driven by massive structural change in the US industry. More efficient, specialised and generally larger sow units were replacing geographically dispersed farrowing operations that were, in many cases, parts of diversified farming operations. Sows from specialised maternal lines under fulltime, professional management simply performed better than sows from traditional rotational breeding systems managed by producers who had to divide their time, expertise and talents among several, often-competing, enterprises.


From what I hear from some of the industry's leading consulting veterinarians, it is no accident that the recent increase in litter size coincides with the advent of circovirus vaccines. Even with the periodic porcine reproductive and respiratory syndrome (PRRS) outbreak or a bout with true swine influenza, hog herds are simply healthier than they have ever been – and it shows. In addition, the ton or so of feed that a sow consumes each year now costs 20 to 30 per cent more, providing a stronger incentive to save more pigs. Finally, the move to later weaning ages led to larger subsequent litters. Add it up and the increases in litter size are offsetting much of the reduction in the breeding herd – and pig survival rates are more than offsetting the remainder of breeding herd reduction.

Price Forecasts
Tables 2 and 3 show forecasts for supplies and price based on Friday's report – and the picture is not pretty. Modest reductions in slaughter are coming, but much of it is driven by fewer imported market hogs and feeder/weaner pigs from Canada. At present feed costs (and those implied by corn and soybean meal futures), none of the quarterly prices in Table 3 are profitable. Q2-2010 Lean Hogs futures are very close at present but this report will, perhaps, put more pressure on summer 2010 futures.

Some of the forecast numbers have likely changed since this survey was done in early June. The first 10 days of June saw a huge sell-off in Lean Hogs futures and the continuing struggles of pork cutout values and cash hog prices finally, I think, got some producers thinking seriously about cutting sow numbers or exiting the business. Cull sow prices have fallen by 30 to 40 per cent as sow offerings have increased.

Sow processors are taking more sows but the pace of the reduction will be dictated by how well sow products like breakfast sausage, brats, etc. move to consumers. Prices of these products will decline some but remember that many of these are branded, value-added products whose prices carry significant quality connotations. One doesn't destroy many years of value-building by using fire sale prices, so these companies will be careful about how to use price to sell more product regardless of how badly some of us may want to ship some sows.

[mikey]

Weekly Outlook: Luck May be Changing for Producers
US - The breeding herd is not dropping fast enough to bring pork production back to profitability, writes Chris Hurt, Extension Economist at Purdue University.

 Chris Hurt
Extension Economist
Purdue University
 

However, falling corn prices and prospects for lower soybean meal prices this fall are allowing producers to begin to feel like there may be some rays of hope.

The breeding herd on 1 June was reported by USDA to be down about three per cent. Producers’ farrowing intentions are down three per cent this summer and down two per cent this fall. While smaller farrowings would seem to signal similar reductions in pork supply, that will not be the case because of more pigs per litter and somewhat higher marketing weights as corn prices are expected to be lower.

As producers reduce sow numbers, they tend to cull the least productive sows. This means the highest productive sows remain and the number of pigs per litter increases more rapidly. As an example, in the first-half of 2009, the number of pigs per litter increased by 2.5 per cent. This compares with an average of just 0.8 per cent annual rate over the past decade. The critical point is that pork supplies will not change much even with the smaller breeding herd. Weights will likely be higher in the coming 12 months as feed prices drop, reflecting the larger anticipated size of corn and soybean production. Pork production is expected to drop only about one per cent over the coming 12 months. This small supply reduction will not boost prices back to profitability in 2009.

The loss of demand due to H1N1 has likely been the single most significant factor in causing the failure of a spring pork price rally. It is most likely the loss of exports rather than loss of domestic demand that has caused the price weakness. The May trade data will be released on 10 July and will give the first picture of how much damage there was to export volumes. Unfortunately, about five per cent of the US pork production may have been diverted from the foreign market to domestic consumers.

H1N1 may have longer lasting impacts. Flu will be in the news again this fall as medical experts around the world caution against the second wave of H1N1. It was the second wave of the 1918 “Spanish Flu” in the fall of 1918 that had the highest human fatality rates. Even though H1N1 in humans is not related to pork consumption, simply having flu in the news likely means there will be some continued loss of pork export demand.

While producers couldn’t get a break in the past two months, their luck may have shifted. Summer weather is more favorable and yield prospects are rebounding. On 24 April when news of H1N1 broke, July corn futures were $3.86. They reached a high of $4.50 in early June and now have dropped closer to $3.40 per bushel. July soybean meal was $318 per ton on April 24th reached $433, and has now moderated a bit toward $400 at this writing.

Estimated cost of production has come down with the recent sharp drop, especially in corn prices. Estimated production costs are now near $48 per live hundredweight for this summer and drop closer to $46 this fall. Given current feed price expectations based on futures markets, estimated costs in 2010 would average about $46 to $47 per live hundredweight.

What about hog prices? Prices are expected to average in the higher $40s this summer and mid $40s in the final quarter of 2009. Prices should once again trade in the mid-to-higher $40’s this winter, move into the lower $50s for the spring, and low-to-mid $50s in the summer of 2010, especially if the impacts of H1N1 are negligible by that time.

These prices and costs would mean the producers would continue to operate with losses of about $5 to $7 per head for the second-half of 2009. This is at least an improvement over an estimated loss of $20 per head in the first-half of 2009. Profitability could return as early as late-winter 2010.

Corn prices are lower right now than many had anticipated. Ownership of corn for the coming year’s feeding needs should be considered. Soybean meal prices should also collapse as we near the more abundant new crop supplies, and as markets this winter look to the restoration of the Southern hemisphere crop. Waiting to cover meal needs seems prudent at this point.

Maybe the luck has shifted for pork prices as well. Lean hog futures have been so depressed a sizable rally would not be out of the question. If producers feel that luck is finally shifting their way, then waiting for further recovery in pork prices seems prudent as well.

[mikey]

Weekly Roberts Report
US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.


LEAN HOGS on the CME were mostly up on Monday with the exception of the May 2010 contract. JULY’09LH futures closed at $60.65/cwt; up $0.675/cwt and $2.625/cwt higher than this time last week. AUG’09LH futures were up $0.900/cwt at $62.050/cwt and $3.425/cwt higher than last report. The DEC’09LH contract gained $0.750/cwt to $59.000/cwt and $3.675/cwt over last Monday’s report. Prices were supported by strong chart signals and the lifting of the Russian pork import ban. Funds bought on lower CBOT corn futures. The weak US economy and higher crude prices were somewhat bearish. USDA put the average pork cutout at $55.00/cwt, up $1.23/cwt but $0.28/cwt lower than this time last week. Several floor sources noted position adjustment ahead of the official Goldman Roll that will begin on Wednesday. This is a shifting of nearby month’s positions into the next month in a relation to the Standard & Poor’s Goldman Sachs Commodity Index. The latest CME Lean Hog Index was placed at $58.75/lb vs. $59.03/lb this time last week. Packer demand is expected to be unaffected due to the fire at Smithfield Food’s plant fire in Wisconsin. A spokesperson for SFDS said that other plants would take up the processing slack. According to HedgersEdge.com, the average pork plant margin declined $2.65/head from this time last week to a negative $10.40/head. This was based on the average buy of $42.74/cwt vs. the average breakeven price of $38.83/cwt. It would be a good idea to put a few extra pounds on those finishing hogs before letting them go.

CORN futures on the Chicago Board of Trade (CBOT) were down again in on Monday after a weak open. The JULY’09 contract closed at $3.432/bu; off 2.4¢/bu and 33.75+¢/bu lower than last Monday. DEC’09 corn futures finished at $3.442/bu; down 13.25¢/bu and 53.0¢/bu under last report. Good crop weather, bull spreading, a strengthening US dollar causing exports to slow, and lower crude oil prices pressured the corn market. Support was found in tight supplies on slow farmer selling. Israel and South Korea were among export buyers as USDA reported corn-inspected-for-export at 31.1 mi bu vs. expectations between 30.0-35.0 mi bu. USDA placed the US corn crop at 71 per cent good-to-excellent condition vs. 62 per cent this time last year. Funds sold about 12,000 contracts as large speculators continue to increase net bear positions. It looks like the December ’09 corn chart may have posted an exhaustion gap while technically oversold with a Relative Strength Index (RSI) of 24.18. An RSI at or below 30 is considered oversold while an RSI at or above 70 is considered overbought. These prices may be too low for large specs and funds to resist. Hopefully the ’09 crop is 70-80 per cent sold.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were down on Monday. The JULY’09 contract closed off 43.0¢/bu at $12.000/bu and 15.0¢/bu under last report. The NOV’09 contract closed at $9.630/bu; off 43.0¢/bu and 20.5¢/bu lower than Monday a-week-ago. The same negative factors affecting corn worked on soybeans: ideal crop weather; a firm US dollar; and a sharp drop in crude oil prices. Exports were supportive as USDA put soybeans-inspected-for-export at 14.1 mi bu vs. expectations between 10.0-13.0 mi bu. Basis remained firm amid quiet farmer sales. USDA placed soybeans in good-to-excellent condition at 66 per cent vs. 68 per cent last week and 58 per cent this time last year. Funds sold about 3,000 lots in positions squaring. Hopefully 70 per cent of the ’09 crop has been priced.

WHEAT futures in Chicago (CBOT) were off on Monday. JULY’09 wheat futures finished off 9.75¢/bu at $4.904/bu; 38.0¢/bu lower than last report. The SEPT’09 wheat contract closed at $5.192/bu; off 9.75¢/bu and 38.5¢/bu lower than this time last Monday. Nearby wheat futures fell to four-month lows. Good harvest numbers on rising global supply are proving bearish for prices. In addition, bearish outside markets and a stronger US dollar weighed on price. Exports were neutral with USDA placing wheat-inspected-for-export at 12.1 mi bu vs. expectations between 11.00-14.0 mi bu. Saudi Arabia bought 440,000 tonnes (16.17 mi bu). Late Monday USDA placed the US wheat crop at 72 per cent good-to-excellent condition vs. 76 per cent last week and 69 per cent this time last year. Sinking US prices pressured prices in Europe while heat stress on the crop in northern France was supportive. Reports from early wheat harvest in the center-west of France indicated acceptable yields and very good milling quality wheat. Funds sold 3,000 contracts. As suggested last week, it would be a good idea to finish pricing the ’09 crop at this time. It will not pay to store wheat this year.


 

[mikey]

CME: May Pork Exports Lower Than a Year Ago
US - CME's Daily Livestock Report for 10 July reports that there were a number of USDA reports released on Friday and it will take more than a couple of paragraphs to digest all the information available.



Given all the speculation about the state of US meat exports following the flu outbreak, we will focus on the May export data and then cover some of the highlights of the grain and meat supply and demand data on Monday.

US meat exports contracted sharply in May, partly due to the outbreak of H1N1 flu virus but also due to lingering effects of the global recession and a relatively stronger US currency compared to year ago levels. Also, last year’s export volume was quite high, which tends to skew the year over year comparisons. The data below is quoted on a shipped weight basis and the comparisons will vary slightly from the carcass weight export data that will be released on Monday by ERS.

The data showed that total US pork exports in May were 104,905 MT, 34.02 per cent lower than a year ago. Shipments to all major markets declined compared to a year ago but declines to some were truly staggering. Pork exports to China and Hong Kong were down 40 per cent from the previous month and were 82.8 per cent lower than the previous year. Exports to these markets were expected to contract following the Olympics induced bubble of a year ago but the most recent decline was clearly driven by the flu outbreak and resulting bans. Total US pork exports to Mexico in May were 16 per cent lower than the previous month and now 5.7 per cent lower than a year ago. Also, shipments to Japan, the top market for US pork, were down 13.5 per cent from the previous month and 15.7 per cent lower than a year ago.


As for US beef exports, they also declined compared to a year ago despite the fact that, different from a year ago, US beef packers now have access to the Korean market. Total US beef and veal exports in May were 53,000 MT, 4.8 per cent lower than a year ago. Exports to Mexico, the top US beef market, were 14,927 MT, 20.7 per cent lower than a year ago. Shipments to Korea have cooled off significantly compared to a year ago and in May were just 2,500 MT, compared to almost 7,000 MT back in January. Part of the reason for the decline may be seasonal but also a stronger US dollar has negatively impacted trade.

As for chicken exports, they too have lost some of their sizzle. Total US exports of fresh/frozen chicken in May were 257,296 MT, 10.3 per cent lower than a year ago.