World Agricultural Supply and Demand Estimates – June 2011
With many important crop-growing regions affected by flooding or drought, the projections are 'highly tentative', according to the latest USDA World Agricultural Supply and Demand Estimates.

Note: Because spring planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative. National Agricultural Statistics Service (NASS) forecasts are used for US winter wheat area, yield and production. For other US crops, methods used to project planted acreage, harvested acreage and yield are noted on each table.

Livestock, Poultry and Dairy
The forecast for 2011 total meat production is raised from last month, reflecting higher beef production. Large cattle placements and larger cow slaughter, due in part to drought in the Southern Plains, is reflected in an increase in the beef production forecast. However, forecasts for pork and poultry are reduced from last month as higher forecast grain prices are expected to trim hog weight gains and put additional pressure on broiler producers. USDA’s Quarterly Hogs and Pigs report to be released on 24 June will provide an indication of producer farrowing intentions for the remainder of the year. For 2012, meat production forecasts are reduced as higher forecast feed costs pressure hog weights and slow the expected recovery of the poultry sector. Higher feed prices are expected to slow feedlot placements as producers keep cattle on forage longer. The egg production forecast for 2011 is raised on stronger second half production but the forecast for 2012 is reduced on higher feed prices and less demand for hatching eggs.

Export forecasts for red meat and poultry are raised from last month. Beef exports for 2011 are forecast higher on strength in a number of markets and expected improvements in exports to Mexico. Pork, broiler, and turkey exports were larger than expected in the first quarter and the forecasts for the remainder of 2011 are raised. Beef and turkey exports are raised for 2012, but no changes are made to pork or broiler exports.

Cattle and broiler prices for 2011 are lowered from last month on weaker-than-expected demand but hog prices are unchanged. Broiler prices are lowered for 2012.

The milk production forecast for 2011 is raised. Producers are expected to continue to expand herds through the middle of the year and although herds may begin to decline toward the end of the year, cow numbers are expected to be above 2010. However, higher feed costs will impact profitability and the dairy cow inventory is expected to decline in 2012. Tighter feed supplies will also likely impact the rate of increase of milk per cow. As a result, the milk production forecast for 2012 is reduced from last month. Commercial exports are forecast higher for 2011 largely due to stronger expected cheese exports. However, imports of cheese and milk proteins have been stronger than expected and the import forecast for both 2011 and 2012 is raised.

Dairy product price forecasts are raised from last month. Butter supplies are tight and demand for cheese, non-fat dry milk (NDM) and whey are expected to support product prices. Class III and Class IV price forecasts are raised from last month in line with the increased product prices. The all milk price is forecast at $19.65 to $20.05 per cwt for 2011. Price forecasts for 2012 are also raised as the smaller production increase is expected to support higher product and Class prices. The all-milk price is forecast at $17.75 to $18.05 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered this month as reduced carry-in more than offsets an increase in expected production. Beginning stocks are lowered 30 million bushels with a 10-million-bushel reduction in imports and a 20-million-bushel increase in exports for 2010/11, both based on the pace of shipments to date. All wheat production for 2011/12 is forecast at 2,058 million bushels, 15 million higher than last month. The winter wheat production forecast is raised 26 million bushels with higher forecast yields for Hard Red Winter, Soft Red Winter, and Soft White Winter wheat. Partly offsetting is a projected 11-million-bushel reduction for durum and other spring wheat production as seedings are projected 290,000 acres lower. Flooding and persistent wet soils have delayed planting in North Dakota and Montana well beyond the normal planting window.

US wheat usage for 2011/12 is unchanged. Ending stocks are projected 15 million bushels lower at 687 million bushels but remain above the 10-year average. The 2011/12 season-average farm price for all wheat is projected at a record $7.00 to $8.40 per bushel, up 20 cents on both ends of the range, reflecting both tighter domestic supplies and higher expected corn prices. The forecast 2010/11 wheat farm price is also raised this month, up five cents per bushel to $5.70 per bushel.

Global wheat supplies for 2011/12 are projected slightly lower this month as an increase in beginning stocks is more than offset by lower production. Global beginning stocks are projected 4.9 million tons higher mostly reflecting increased stocks in Russia as feeding is reduced 2.0 million tons and 3.0 million tons, respectively, for 2009/10 and 2010/11. Beginning stocks for 2011/12 are also raised 0.5 million tons each for Argentina and Canada with the same size reductions in 2010/11 exports for each country. Partly offsetting is a 1.5-million-ton decrease for 2011/12 beginning stocks for Australia with higher 2010/11 exports.

World wheat production is projected 5.2 million tons lower for 2011/12. At 664.3 million tons, production would be the third highest on record and up 16.1 million from 2010/11. This month’s reduction for 2011/12 mostly reflects a 7.1-million-ton decrease for EU-27 wheat output. Persistent dryness, particularly in France but also in Germany, the United Kingdom and western Poland, has reduced yield prospects for EU-27. Production is also reduced 1.0 million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding. Production is increased 1.5 million tons for Argentina and 0.5 million tons for Australia, both reflecting favourable planting conditions and strong producer price incentives to expand area. Production is also raised 0.5 million tons for Pakistan as increased use of higher quality seed and adequate water supplies resulted in higher-than-expected yields.

Global wheat trade for 2011/12 is projected slightly higher reflecting a 0.5-million-ton increase in expected imports by EU-27. Exports are lowered 3.0 million tons for EU-27. Export increases of 2.0 million tons and 1.0 million tons, respectively, for Australia and Argentina offset the EU-27 reduction. Exports are raised 0.3 million tons for Pakistan with the larger crop. Global wheat consumption is projected down 3.3 million tons, mostly reflecting a 2.5-million-ton reduction in EU-27 domestic use. Wheat feeding is lowered 0.5 million tons for Canada. Global ending stocks for 2011/12 are projected 3.0 million tons higher as decreased wheat feeding in earlier years raise projected stocks in Russia, more than offsetting declines in Australia and EU-27.

Coarse Grains
Projected US feed grain supplies for 2011/12 are sharply lower with reduced prospects for corn acreage. Corn planted area for 2011/12 is lowered 1.5 million acres from March intentions to 90.7 million acres. Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May. Harvested area is lowered 1.9 million acres, to 83.2 million with the additional 400,000-acre reduction reflecting early information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley. Production is projected at 13.2 billion bushels, down 305 million from last month, but still a record, and up 753 million from 2010/11.

US feed grain usage changes for 2011/12 include a 100-million-bushel projected decline in corn feed and residual use and a five-million-bushel increase in sorghum exports. Feed grain ending stocks are sharply lower with expected corn ending stocks down 205 million bushels to 695 million. Corn ending stocks are projected 35 million bushels lower than beginning stocks indicating a stocks-to-use ratio of 5.2 percent compared with the 2010/11 forecast ratio of 5.4 percent. The 2011/12 season-average farm price for corn is projected at a record $6.00 to $7.00 per bushel, up 50 cents on both ends of the range. Projected farm prices are also raised for the other feed grains.

Global coarse grain supplies for 2011/12 are projected down 7.8 million tons this month with lower beginning stocks and production. Reduced US corn production, lower EU-27 barley production and reduced corn beginning stocks in China, more than offset increases in China corn production. EU-27 barley production is lowered 2.2 million tons as prolonged dryness across western and northern Europe has sharply reduced yield prospects in the major producing countries. China corn area is raised for 2010/11 in line with the most recent official government area estimates with the year-to-year percentage increase for 2011/12 largely maintained.

China corn production increases 5.0 million and 6.0 million tons, respectively, for 2010/11 and 2011/12 with yields unchanged month-to-month. More than offsetting the higher production levels is higher estimated corn consumption for both feeding and industrial use. China corn consumption is raised 8.0 million tons and 13.0 million tons, respectively, for 2010/11 and 2011/12. Together these changes leave projected 2011/12 corn ending stocks down 12.0 million tons for China. At the projected 51.0 million tons, China’s stocks would be down 2.7 million tons from 2010/11 and just below the levels of the preceding two years, better reflecting the continuing rise in domestic corn prices as production struggles to keep pace with rising usage. Although China’s stocks represent 46 percent of the world total for 2011/12, China is not expected to be a significant exporter.

Global 2011/12 corn trade is raised slightly this month with higher imports for EU-27 and higher exports for Ukraine. Ukraine exports are raised 1.0 million tons with higher production and stronger expected demand from EU-27. Russia exports are lowered 0.5 million tons with lower production. Other important trade changes this month include a 0.2-million-ton increase in sorghum imports by Mexico, driving the US export increase, and a 1.5-million-ton reduction in EU-27 barley exports with lower production and tighter supplies. Barley imports are lowered for Saudi Arabia and China. Global corn ending stocks for 2011/12 are projected down sharply this month, falling 17.3 million tons mostly reflecting the usage revisions in China. The projected 5.2-million-ton drop in US ending stocks accounts for most of the rest of the decline. Global corn stocks are projected at 111.9 million tons, the lowest since 2006/07.

Oilseeds
This month’s US oilseed supply and use projections for 2011/12 include higher beginning and ending stocks and reduced exports. Although adverse weather has slowed soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season. Higher beginning stocks reflect a lower export projection for 2010/11. Soybean exports for 2010/11 are reduced 10 million bushels to 1.54 billion bushels reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China. Soybean ending stocks for 2010/11 are projected at 180 million bushels, up 10 million. US soybean exports for 2011/12 are reduced 20 million bushels to 1.52 billion, reflecting increased competition from South America resulting from an increase in the recently harvested Brazilian soybean crop. With larger supplies and reduced exports, ending stocks for 2011/12 are increased 30 million bushels to 190 million. Other changes for 2010/11 include reduced soybean oil used for biodiesel production, reduced projected food use of soybean oil, and lower soybean oil exports, all resulting in increased ending stocks for 2010/11 and 2011/12.

Soybean, meal and oil prices are all raised this month. Led by higher corn prices, the US season-average soybean price for 2011/12 is projected at $13.00 to $15.00 per bushel, up $1.00 on both ends of the range. Soybean meal prices for 2011/12 are projected at $375 to $405 per short ton, up $25 on both ends of the range. Soybean oil prices are projected at 58 to 62 cents per pound, up two cents on both ends of the range.

Global oilseed production for 2011/12 is projected at 456.9 million tons, down 2.3 million from last month, mainly due to lower rapeseed production. EU-27 rapeseed production is reduced 1.2 million tons to 18.8 million mainly due to lower yields resulting from dry conditions in April and May in major producing areas of France and Germany. Rapeseed production for Canada is lowered 0.5 million tons to 13.0 million due to reduced area planted resulting from excessive moisture this spring. China soybean production is reduced 0.5 million tons to 14.3 million reflecting lower area as producers shifted to corn. Other changes include increased sunflower seed production for Russia and reduced cottonseed production for Australia, Pakistan and the United States. Brazil’s 2010/11 soybean production is increased 1.5 million tons to a record 74.5 million, reflecting yield and production increases reported in the most recent government survey.

Monday, June 13, 2011
CME: Lower Harvested Corn Acres Expected in 2011
US - The latest USDA supply/demand estimates are getting a lot of coverage in the press, and for good reason, write Steve Meyer and Len Steiner.


Normally USDA does not change its estimates of the acres planted in its June report (although it has happened before) as it waits for the results of the June acreage survey. The results of that survey will be published on 30 June in the Acreage report. There has been enough information on planting delays and flood damage that USDA felt compelled to adjust its supply calculations for the upcoming corn crop. The most recent estimate puts planted corn acres at 90.7 million, 1.5 million acres less than the May estimate but still 2.5 million acres higher than a year ago. It is also important to note that USDA increased the abandonment rate as evidenced in the number of acres harvested.


Last year, the ratio of harvested to planted acres was 92.3 per cent and that ratio was used in the May estimates. However, damage due to flooding is expected to lower the ratio to 91.7 per cent. Consequently, harvested acres this fall are expected to be about 1.9 million acres less than a year ago. This revision in planted and harvested acres removed 305 million bushels from the expected corn output from the upcoming harvest. In previous years, such a change would be notable. Given that we are expected to start the year with minimum pipeline supplies, this revision in output is seen as potentially explosive for new corn crop prices.

While the current revisions provided a jolt to the market and caused corn futures to hit record highs on Thursday (futures were slightly lower in overnight trading), we will have to wait for the June Acreage report to get a better sense as to the size of the crop farmers put into the ground this spring, the authors write. USDA did not make any changes as to the expected yields for the upcoming crop. While there is a lot of concern about corn yields from areas that were planted late (ECB), many states in the WCB are seeing very good corn crop conditions. In the latest report, USDA rated 81 per cent of the Iowa corn crop in good/excellent condition. With plenty of risk already built into the market, and plenty of weather events, USDA likely decided to defer on the yield issue until the crop condition picture becomes clearer.


On the demand front, USDA decided to lower feed use by 100 million bushels, reflecting profitability issues in livestock and poultry industry and expectations for lower meat production in late in 2011 and 2012. Corn exports and ethanol demand were left unchanged. Higher energy prices and tight world corn supplies remain long term bullish for corn prices and will further pressure already razor thin pipeline supplies. The export issue is particularly critical. Trade likely noted that USDA changed how it calculates China corn use, raising expected China corn consumption 8 per cent from previous estimate. World corn stocks at 111.89 million MT now 13 per cent less than May estimate and 22 per cent lower than in 2009/10.

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."

With the recent announcement that the country is now FMD free and the shipping of breeding animals may begin southbound,has to be  good news for breeders in the north looking for new markets in the south.Those in the south will now have access to different bloodlines to help them improve and build up their own herds.
It has been written that the national herd has downsized by x% while the commercial operations has increased by x%.This can very easily be explained by the fact during 2010,the country was still in a drought situtation.I would estimate not only goats would be down but other livestocks as well.In every country on this planet it has been recorded during times of uncertain weather patterns,small holders are the first to sell off their entire herd to control their expences while the larger holders will only sell off a limited number of animals.Larger holders are better suited to ride out uncertain times while the small holder does not enjoy such a luxury.There was also some sort of health related disease that was claimed to be weather related that seemed to have taken many does and doelings.Combine these 2 major events and it is not hard to see why the national herd numbers are down and the rebuilding of the numbers is already beginning.I would expect to see the number of commercial farms to increase in the future as people become interested in the world of the goat.
The rural countryside still holds the key for the production of protein,the provinces has the land mass to support large numbers but as of yet probably cannot due to limited forage supply.In the future I would expect to see numbers in the countryside supporting a meat goat industry.

Thursday, June 09, 2011P
CME: Output of Sorghum, Barley & Oats Falling
US - Output levels for sorghum, barley and oats have been falling for many years, write Steve Meyer and Len Steiner.


In response to our discussion yesterday regarding dried distillers grains with solubles (DDGS), the major by-product of corn ethanol production, our friend Dr. Tom Elam of FarmEcon LLC sent a note urging us to also consider the other three major feed grains – grain sorghum, barley and oats. Dr Elam wrote: 'Corn acres have grown at the expense of the other three feed grains, and not by a little bit. When you look at total feed grains + DDGS feed use the trend is down, not flat.' The authors says they were aware of this impact of increasing corn acres but did not have the space to discuss the issue in the previous edition – so they address the topic now.

As can be seen in the graph below, the output levels for these three 'other feed grains' has been falling for many years. Barley output in 2010 was less than half the level of 1990. Oats output was only 27 per cent as large as it was in 1990 and sorghum production was 40 per cent lower than in 1990. Total sorghum, oats and barley output in 2010 was only 45 per cent as large as the production of those three grains in 1990.


And, while the rate of decline has slowed, the acreage and production levels for these three grains have fallen since 2003 – the beginning of the nine-year period that they mentioned in the previous DLR as being a period of flat corn + DDGS availability for livestock and poultry feeders. In fact, the total acres planted to these crops has fallen from 19.365 million in 2003 to just 11.414 million in 2010. Production has fallen from 833.885 million bushels to only 606.863 million bushels during that same time period. USDA has projected that the total acres planted to these three crops will grow this year by 22,000 to 11.436 million.

Will the meat/poultry complex finally see a respite from the production and price pressure of the US broiler sector soon? Recent USDA data for the number of broiler-type chicken eggs placed in incubators certainly suggest that is possible. Egg sets have been between 0.3 per cent and 2.2 per cent lower than one year ago over the past four weeks. It is the first string of four weeks in which egg sets have fallen relative to one year earlier since the last two week of 2008 and first two week of 2009. After robust growth of 3.3 per cent in 2010, total US egg sets are up only 0.3 per cent year-to-date in 2011.


These lower sets should show up as lower placements in the next two to three weeks and those placements should show up as fewer birds slaughtered five to seven weeks past that point. The exact timing depends on which type of bird is seeing reduced output. Today's 'meat chickens' are divided between two pretty distinct sub-sectors – the small birds that are primarily processed into chicken parts for food-service and the big birds (7-9lbs) that are boned out to produce boneless chicken products. Heavier weights imply a changing product mix rather than longer feeding as is frequently the case in the pork and beef industries.

A reduction in broiler output would be good news for everyone, say the authors, including the companies producing broilers. Retail chicken prices have held very close to year-ago levels in recent months while beef and pork have set new record highs. The low relative price of chicken has been a drag on beef and pork demand and low wholesale chicken prices have had broiler margins in the red since last fall. Some companies may be able to stand such losses but some cannot and most observers believe more consolidation is on the way in the broiler sector.

How many crop acres have been lost due to wet conditions and flooding? That is a common question we are hearing at this week's World Pork Expo in Des Moines. Dr Robert Wisner of ISU provided a summary of anecdotal evidence to a meeting earlier this week. NDSU reports two million acres of prevented planting in North Dakota. Missouri had 570,000 acres flooded before the coming Missouri River flood. Mississippi estimates it has lost 600,000 acres while Louisiana has lost 280,000 of crop land. Another 500,000 were listed for Illinois and as much as one million acres are estimated lost in Arkansas. Then add 450,000 of corn and 350,000 of beans in the Missouri Valley from South Dakota through Missouri.

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.

Monday, June 06, 2011
Timely Boost for Scotland's Pig Producers
SCOTLAND, UK - NFU Scotland has welcomed the announcement on Friday (3 June) that the Brechin abattoir in Angus will now be used for slaughtering pigs, as Tulip and A P Jess enter into a long term contract in the East of Scotland.
 

The move will greatly increase the processing capacity for pigs in Scotland to the benefit of both producers and consumers.

Philip Sleigh, Chairman of the NFU Scotland Pigs Committee said: “Today’s news is a timely boost to Scottish pig farmers who have been enduring rocketing costs and poor prices, sending many producers out of business.

“The contract at Brechin should ensure that the majority of pigs produced in Scotland will now be processed in Scotland. And competition for pigs in the market can only be a good thing for producers.

“Of course all pigs being processed in Scotland does not necessarily equate to profitability for the pig sector. We still need a decent return from the market that reflects the high quality and high welfare product we produce.

“Tulip and AP Jess have recognised that processing within Scotland makes commercial sense, and this investment sends a clear signal that the Specially Selected Pork brand is getting the recognition it deserves.”

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.

Friday, June 03, 2011
One Ton of Tainted Pork Seized in Bulacan
PHILIPPINES - At least a ton of tainted pork was intercepted while it was being brought to the local market in Bulacan province's Marilao town on Thursday night.


Police acting on a tip caught a tricycle driver transporting the meat in Loma de Gato village, reports GMA News, citing Radio DzBB.

The driver, initially identified as Reynaldo Bendam, was brought to a local police station for questioning.

Mr Bendam also faces added sanctions after he failed to present a driver's license, the report said.

Thursday night's incident happened when authorities were on alert against the selling of tainted fish from some areas in Batangas and Pangasinan that were affected by a recent fish kill.

In Metro Manila, authorities had seized several hundred kilos of double-dead fish during searches at public market stalls.

Thursday, June 02, 2011
CME: Sharp Pullback in Grain Markets
US - Grain markets pulled back sharply on Tuesday following reports over the weekend that Russia would lift wheat export restrictions, which have been in place since last summer, write Steve Meyer and Len Steiner.


Trade reports indicate that feed wheat values in the Black Sea region are currently priced below US corn prices and in the short term this is seen as negative for US corn exports. The pullback may be short lived, however, given the many challenges facing US corn and soybean production this year.


Below are some of the issues:

Some major corn production areas remain behind in plantings and some acres may not be planted at all. The latest crop progress report showed just 19 per cent of the corn crop in Ohio had been planted as of 29 May. The plantings report in March indicated Ohio farmers would plant 3.7 million acres of corn, or 4 per cent of the national acreage. Farmers there have only a few days before making some critical decisions as to whether to abandon plantings and opt for preventive planting insurance. Regardless, the production prospects out of this area are significantly worse than they were back in April. Overall, the latest crop progress report showed that just 86 per cent of the crop acres had been planted as of 29 May compared to 97 per cent a year ago.


There is significant risk of flooding in areas along the Missouri river in South Dakota, Northern Iowa, Nebraska. News reports indicate that the Army Corps is planning to relieve pressure on dams by flooding farmland and this could lead to more lost acres, similar to what happened in the Mississippi Delta. While the estimates of the number of acres that could be flooded vary, it is one more issue that one needs to consider when estimating corn crop supplies that will come to market this fall.


And if producers up North are having to deal with the effects of melting snow and excessive rainfall, producers in the Southern states are coping with one of the worst droughts in the last seventy years. Many areas in Texas are experiencing exceptional drought conditions and this will negatively impact corn and wheat supplies coming from there. USDA issued its first crop condition report on Tuesday and overall it showed that 6 per cent of the national corn crop currently in the ground is in poor/very poor condition, 2 points higher than the comparable period a year ago. However, 31 per cent of the corn crop in Texas was rated as poor/very poor. The corn plantings survey in March pegged Texas corn acres at 2.15 million acres, about 2 per cent of the national crop. The winter wheat condition in Texas and surrounding areas is even worse. The crop progress report showed that 76 per cent of the wheat crop in Texas is in poor/very poor condition, compared to just 9 per cent a year ago. Spring wheat plantings are also very behind and this will tend to lift the overall grain complex.
Bottom line: The fact that Russia lifted its export ban may have provided a bit of relief for grain prices but exceptionally tight US corn supplies and production challenges on many fronts will likely cause the market to maintain significant risk premiums in place, impacting US livestock and poultry production for the remainder of 2011 and in 2012.

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

US Pork Exports to China on the Rise
US exports of pork and pork variety meats to China have grown rapidly since summer 2010 and are expected to continue rising through 2011, according to Michael Woolsey and Jianping Zhang in the latest GAIN Report from the USDA Foreign Agricultural Service.

Following China's lifting of its H1N1 ban on US pork in May 2010, the United States quickly returned as China's top source for imported pork. Further sales gains this year will be supported by weak local pork production and strong consumer demand.

US Pork Exports to China Surge
Fuelled by a strong economy and consumer demand, along with a continued slide in Chinese pork production, US exports of pork and pork variety meats to China have grown rapidly since summer 2010 and are expected to continue rising through 2011. These sales jumped to more than 10,000 metric tons per month beginning in July 2010 and have continued at or above this level into the first quarter of 2011.

Overall, US exports to China reached 192,500 metric tons (valued at US$169 million) in the eight-month period ending February 2011. Exports to Hong Kong (most of which are re-exported to China) added another 63,600 tons ($92 million) to this total.

Traders expect sales to continue at or above this pace at least through the summer and possibly into next year due to a continued expected shortage in local supplies.

US Returns as China's Top Pork Supplier
Following China's lifting of its H1N1 ban on US pork in May 2010, the United States quickly returned as China's top source for imported pork. So far in 2011, the US has accounted for 59 per cent of China's pork and pork product imports. Prior to China's lifting of its US pork ban, the EU provided nearly 80 per cent of Chinas imports with Canada accounting for most of the remainder.

The US is expected to continue as China's top supplier as Chinese importers report pricing and availability for US pork is generally favourable over alternative sources.



China's pork imports rise with higher market prices
Source: China Customs and Ministry of Agriculture. Imports are from all sources and include variety meats
China Pork Production Slowly Recovering from Low Prices and Disease
Weak prices in the first half of 2010, followed by serious outbreaks of foot and mouth disease (FMD) and diarrhoea, resulted in sharp herd reductions among some backyard operators with reports of many quitting pig farming. FAS/Beijing has been told the 2010 FMD strain was not detected previously and is only recently being brought under control. The new virus strain was reportedly Burma 98. It is air-spread within 25km. Some farmers reportedly used vaccines for other types of FMD to control Burma 98 with unsatisfactory results, resulting in a spread of the disease to numerous provinces in 2010. Culling was extensive in some areas. For example, contacts in Xinjiang report that 100,000 pigs were culled in Kashgar alone. Contacts report that a new vaccine for Burma 98 virus strain was introduced early this year by the China FMD Reference Lab in Lanzhou and the early results look promising.

Meanwhile, the 2010 diarrhoea epidemic was particularly serious in southern China in the winter, which affected piglet survival. The impacts of this disease are reportedly diminishing as the weather continues to warm.

With the resultant lower hog inventory and continued strong consumer pork demand, live hog prices have surged from under 10 yuan (CNY; US$1.53) per kilogram in August 2010 to CNY14.7 ($2.26) per kilogram in March 2011.

The Ministry of Agriculture statistics report China's hog inventory slid to 445 million head in February 2011, down 2.7 per cent from the same period last year, while China’s sow inventory has fallen to 47.4 million head, down 3.3 per cent from the same month in 2010. Anecdotal evidence suggests these numbers are likely significantly lower. Hog producers in Henan and Shandong provinces are reporting the number of fattened pigs ready for slaughter is 20 per cent below the same period in 2010. These producers believe this number will gradually improve over the next six months.

The expectation that prices will continue at a high level has encouraged herd expansion in 2011. With strong demand for piglets and tight supplies, piglet prices have reached three-year highs, up 50 per cent so far in 2011 to CNY28 ($4.31) per kilogram in March. However, analysts and traders believe China's expansion could take up to two years before inventories reach levels achieved in early 2010. Expansion among backyard operators will be slow as rising wages for migrant workers in China's medium- and large-sized cities continue to dampen interest in small-scale pig farming. A shortage of factory workers has reportedly topped two million in the Pearl River Delta alone, driving wages higher nationwide. Small-scale operators are also being discouraged by fears of animal disease and high costs of feed. Corn prices in China are over CNY2,100 ($323) per ton, up 12 per cent from the same month last year.

Traders Report Brisk Sales Despite Higher Pork Prices
Retail pork prices are highest they have been since summer 2008, when pork prices nearly doubled following a serious outbreak of blue ear disease (PRRS) in 2007. The strong market is being fuelled by continued double-digit gains in China's economy. Despite attempts by the Chinese leadership to cool the economy, GDP growth in the first quarter of 2011 reached 9.7 per cent and near double-digit growth is likely for the remainder of 2011.

Bolstered by abundant supply and competitive prices, US variety meats have enjoyed particularly strong demand in China and this will continue through 2011. Traders report the majority of imports from the US are feet, head meat (ears, lips, cheek) and offals. Nearly all these products are used in sausage manufacturing and other processed meats.

Clenbuterol Findings Have Not Impacted Pork Sales so Far
In late March, CCTV broadcast an investigative report of hogs being fed with the banned steroid clenbuterol and purchased by Shuanghui, China's largest processed pork producer. The report sparked a recall of Shuanghui products, along with widespread follow-up media coverage of the clenbuterol problem and a reported crackdown on clenbuterol dealers nationwide. There have been a number of cases in the past decade of illness and fatalities caused by consuming pork with clenbuterol residues. However, there were no reports of illness from consuming Shuanghui pork associated with the current findings and retailers report little or no impact on pork sales following the media reports.

There is a long history of reported clenbuterol use among China's pig producers and eliminating the practice remains a difficult challenge for Ministry of Agriculture regulators who are responsible for feed safety. Reportedly, the steroid is especially prevalent among smaller-scale operators to create a leaner carcass to meet consumer preference for lean pork cuts. The premium for lean carcasses is typically higher when market prices are strong, offsetting the cost of clenbuterol and increasing farmer incentive to skirt the rules and add the substance to feed rations.

China Opens to Pork from Brazil
As China's demand for pork imports continues to rise, China recently expanded its sources of supply by opening to pork from Brazil. This market opening will begin with three pork facilities, with additional facilities added over time. China and Brazil are now finalising certification requirements and shipments are expected to commence in the third quarter of 2011.

Brazil is expected to become a significant competitor in the Chinese pork market as China seeks to diversify its overseas sources beyond the currently approved suppliers (Canada, the EU and the United States).

May 2011

Govt sees FMD-free stamp boosting pork exports05/30/2011 | 03:52 PM

   
The Philippines expects a boost in its pork exports after the World Organization for Animal Health last week declared the country free of the foot-and-mouth disease (FMD), Agriculture Secretary Proceso Alcala said Monday.

In behalf of the Philippine government, Agriculture Assistant Secretary for Livestock Davinio Catbagan received the certification on Thursday from the 87-year-old animal health organization, which keeps its initial and historical name Office International des Epizooties (OIE).

“We are expecting that negotiations with Singapore and Malaysia will bring new business to our pork industry. I figure that livestock output will pick up again now that producers have found a reason to increase local production," Alcala said.

Catbagan added that the country’s FMD-free status will enhance productivity by allowing swine raisers and meat processors to freely transport and trade live animals, and livestock and pork products within the Philippines.

In March, Catbagan said the government was “99.9-percent" confident that the OIE will declare the Philippines entirely FMD-free.

A highly contagious viral disease, FMD infects cloven-hoofed animals like pigs, cows, goats and sheeps. It does not affect humans.

In its latest quarterly report, the Agriculture Department said the livestock subsector recorded a growth of 0.59 percent in the first quarter, amounting to around P49.7 billion at current prices. — PE/VS, GMA News

Brazilian Markets - May 2011
BRAZIL - The Brazilian roller coaster rolls on, continuing its wild and unpredictable ride! The last Brazilian market report, at the end of March, was optimistic, with prices rising strongly, writes Martin Riordan, Sales and Service, Genesus Brazil.
 

But then the tide turned, and since the beginning of April, prices have been falling sharply across the country.

This can be seen partially in the chart, which is based on data from CEPEA, a market research body linked to the University of São Paulo.


The chart shows pig prices in the five major producing states in Brazil. It clearly shows how the two states of Minas Gerais (MG) and São Paulo (SP) constantly outperform the three southern states in terms of price. This is because, in those two states, there is still an active market for hogs, with many producers and many buyers.

However, the industry in the south is dominated by the big integrations, now ruled by Brazil Foods, which incorporates what were previously three big companies, Sadia, Perdigão and Avipal. As Brazil Foods, they have upwards of 400,000 sows.

In this situation, the market for independent hogs is limited. The big companies are self-sufficient in production, and recently the few remaining independent producers in our state, Rio Grande do Sul (RS), complain of a total lack of buyers. Even at low prices, they cannot move their hogs. After a transition period of some ten years, this would appear to be the final death-knell for independent production in this state.

The chart also shows that, after a period of high prices in November 2010, there was a constant collapse until March, when prices started picking up. But this was short-lived, with prices quickly stabilizing in April, and since mid-April the collapse began again (not shown on the chart).

Once again, the question: what explains this? Well, Brazilian exports have been mediocre this year and what had been sustaining prices (or stopping them falling further) was the domestic market. But over recent weeks, this too has held back, probably due to falling beef prices. Brazilians in general prefer to eat beef, and only move to pork to keep the total meat bill within their budget. With high beef prices earlier in the year, the pork market rebounded. Now that beef has fallen, the pork market has slumped.

Prices in the south of Brazil are now around US$ 1.34 per kg live weight, while production costs are about US$ 1.60. So a market hog brings a loss of nearly US$30. And the immediate price tendency seems to be downwards. Some producers in RS reported during the week of May 16 that they couldn’t find buyers at US$ 1.18. Well, not selling, technically they don’t make a loss, but, as we know, their dilemma is much worse. No money coming in to buy feed for more hogs than they should have. Those who have been there know how heart wrenching this is.

The chart shows export performance over the last 12 months, in terms of volume and income. It can be seen from the volume bars that a decline began in October last year which only reversed in February this year, and slowly. There seems to be a trend of rising volume - it remains to be seen if this will continue. The blue income line shows a rising income in US$, indicating higher prices. But over this period the Brazilian currency has appreciated against the dollar, which means that in local currency the increase has been much less. And not enough to prevent the severe fall in hog prices.

On 11 April, the President of Brazil, Dilma Rousseff, arrived in China on an official visit, and within a few hours it was announced that China would begin to import pork from Brazil. This is an important break-through, but as yet has made no noticeable impact on domestic prices. As usual, there will be a period of discovery, trying to work out what real effect it will have. So far, only three plants have been approved by the Chinese, and the talk is of 200,000 tonnes over 5 years. It will obviously help the market in the medium term, but is not a magic wand to solve present problems. First shipments are expected to go in the final quarter of 2011.

Feed prices have fallen slightly, but not significantly, once again not bringing hope to the beleaguered producers. Different regions of Brazil show different results. In the Center West, corn has been harvested recently, and export prices have fallen, allowing prices to drop slightly. But in the south, prices have held steady, bringing no relief.

 

Friday, May 27, 2011
April Soybean Crush Smallest Since 2004
US - Two weeks ago, the USDA lowered the projection of 2010-11 marketing year exports of US soybeans by 30 million bushels, to a total of 1.55 billion bushels, writes University of Illinois economist, Darrel Good.


The reduction resulted in a projection of marketing year ending stocks of 170 million bushels, or 5.1 per cent of projected consumption. That is a more comfortable level of stocks than the previous projection of 4.2 per cent of consumption.

The projection of the marketing year domestic crush of soybeans was unchanged at 1.65 billion bushels, 102 million (5.8 per cent) less than the crush during the previous year. For the past two months, we have chronicled the pace of the domestic crush as estimated by the Census Bureau. The April 2011 crush estimate was released today and revealed a continuation of a very slow pace of crush (figure 1). [Note: The Census Bureau estimates for April are reported as released. Revision in some estimates may be required since calculations of combined meal and oil production per bushel of soybeans crushed during the month exceeded 60 pounds.] The April crush was estimated at 128 million bushels, 7.1 million bushels (5.2 per cent) fewer than crushed in April 2010 and the smallest crush for the month since 2004. The monthly crush has been below 128 million bushels only 3 times since September 2004. Those low totals occurred in either August or September. Cumulative crush for the marketing year to date (September 2010-April 2011) totalled 1.143 billion bushels, 89 million (7.2 per cent) below the total of the previous year.


The slow pace of the domestic crush so far this year reflects a combination of higher product yield per bushel of soybeans crushed and (mostly) a slow-down in soybean meal consumption. Soybean meal consumption during the period September 2010 through April 2011 was 6.4 per cent less than during the same period in the previous year. The largest decline, 22 per cent, was in the export market, as a rebound in South American soybean production has provided more competition for US soybean meal. Consumption of US soybean oil during the same period was about two per cent below that of the previous year. Month-end soybean oil stocks remain large even as the soybean crush and resulting soybean oil production have declined. Stocks at the end of April were marginally smaller than stocks of a year earlier (figure 2). Stock levels below those of a year ago may continue through the end of the marketing year since stocks were very large, at least through July, last year. The USDA projects year-ending stocks to be 885 million pounds (26 per cent) smaller than stocks at the beginning of the year.


To reach the USDA crush projection for the year, crush during the final four months of the marketing year needs to total 507 million bushels, only 13 million less than during the same period last year. Crush during those four months last year was relatively small so that the projection for this year may still be achievable. A monthly rate of about 127 million bushels will be required.