EU Reflects on Pig Industry Situation
EU - Representatives from all Member States and stakeholder groups were invited to a 'Reflection Day' on the EU pig industry in Brussels today with the view to seeking long-term solutions to its present difficulties.

 

At October's meeting of the Agriculture Council, French Agriculture Minister, Bruno Le Maire, highlighted the need for immediate EU action to resolve the difficulties currently experienced by the European pig meat sector as feed prices are rising at the same time as pig meat prices are falling.

The Commission was made well aware of the challenges facing the livestock sector as shown by the recent Commission decision to release cereals from intervention storage to the market to keep feed ingredient prices down and help livestock farmers. Agriculture Commissioner, Mr Ciolos has stated his determination to tackle speculation in the cereal markets and his desire to include anew mechanism to counteract income volatility in the forthcoming reform of the Common Agriculture Policy (CAP).

Furthermore, the Belgian presidency of the EU is also keen to discuss the EU pig meat market situation before its tenure of the office comes to an end. Consequently, Member State representatives were invited to participate in a 'Refection Day' in Brussels today at a meeting entitled 'The pig meat sector towards 2020'.

Belgium aimed to bring together experts across the pig sector form all Member States to explore good practices in this area with a view to extending these at EU level with a long-term perspective.

It was hoped that Commissioner Ciolos would attend, as well as members of Defra and National Pigs Association to represent the UK.

South Korea Culls Diseased Animals
SOUTH KOREA - South Korea has began culling more than 55,000 animals in an attempt to contain an outbreak of foot-and-mouth (FMD)disease in the country.


The culling began on Thursday in areas near the southeastern city of Andong where the first cases were reported from a pig farm three days earlier.

All 84 livestock markets in the country have been shut down to prevent spreading of the animal disease that affects cloven-hoofed animals such as pigs, cows and sheep.

Yonhap news agency reported on Monday that all farms within a 20-kilometre radius of the affected livestock had been prohibited from selling or removing any of their animals from the area.

The ministry of food, agriculture, forestry and fisheries said it will supply farms with emergency funds of $15m.

CME: Hog and Steer By-Product (Drop) Values
US - Our last report focused on the impact that higher prices for beef at the wholesale level are having on live cattle prices, write Steve Meyer and Len Steiner.



But that is only part of the story since muscle cuts and grinding products make up only a portion of the live animal sold in the open market. By-product values, also known as drop values, account for a good portion of the value that packers derive from slaughtering livestock. Hides, offal, bones and all other such products are sold in the domestic and export markets. The latter is particularly important since particular items (hearts, livers, etc.) trade at a premium in world markets. Hide values also are important. The near death experience of the US auto industry in 2008 caused a sharp decline in demand for leather, which in turn directly impacted the value of cattle going to slaughter. Now that the auto industry has recovered, hide prices also have bounced back and so far in 2010, average hide prices are up some 80 per cent compared to 2009 levels.

The charts below show the ten year history in byproduct values for steers and hogs as well as the ratio of byproduct values to the value of the live animal.

 


In the case of hogs, we calculated an implied live hog price value based on the lean hog carcass IA/MN price and a 74 per cent yield. Live steer byproduct values are currently reported at $12.0/cwt., $2.4/cwt or 25 per cent higher than the comparable week a year ago. Live steer prices (USDA reported 5-day moving average) currently are trading some $17.6/cwt or 21.3 per cent higher than a year ago. But while by-product values for steer are currently trading near all time record highs, keep in mind that overall steer values are near record highs as well. Indeed, steer by-product values now account for about 12 per cent of the live steer prices, about the same as they were 10 years ago.

Hog by-product values also have trended higher although they remain below the all time records established in the summer of 2008. For the week ending 26 November, the pork by-product value was quoted at $4.58/cwt, 6 cents or 1.3 per cent lower than the comparable week a year ago. While byproduct values in steer have contributed about 1/6th of the overall gain in live steer prices, drop values in hogs have offered little help to the overall hog price. This helps explain to a certain extend why hog values have not appreciated as much even though prices for specific pork cuts remain well above year ago levels. The lack of gains in pork drop values will remain a concern for the pork complex going forward. Exports are clearly an issue as shipments of pork variety meats in period January - September were slightly lower than a year ago. Beef variety meat exports in the same time frame were up 15 per cent from 2009 levels.

East Asean aims to be food basket in Asia
[3 December 2010] The Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area has committed to becoming the food basket of Asean and Asia by strengthening collaboration in agriculture and fisheries. “The four countries are ready to become Asean and Asia’s food basket because they really do have a big potential in agriculture and fisheries,” Indonesian Maritime Affairs and Fisheries Minister Fadel Muhammad said. The exports of agricultural and fishery products of the four countries’ combined stand as high as USD50 billion yearly.

I received a email today telling me there is another import order in the works from the USA.This next import is suppose to take place sometime around Feb. 2011.The goats they are looking for range from 5 months to 24 months old.At this time of the year I would say,will be hard to find any 5 month old goats here.

DA Mulls Protection for Local Hog industry
PHILIPPINES - The Department of Agriculture may propose raising the tariff rate on imported pork offals, an official said on Monday.



"Local hog farmers have asked the department to review the current 5 per cent duty on pork offal imports. So, this is being studied by department and it may recommend the increase of the duty to the Tariff and Related Matters body," Assistant Secretary for Livestock Davinio P. Catbagan said in a telephone interview.

Pork offals refer to parts usually discarded as waste or set aside for use in meat by-products, including the tail, hooves, blood, head, brain, heart and liver.

"After the [interagency] Tariff and Related Matters body reviews this, it will be forwarding its decision to the President, and only through an Executive Order may the tariff be adjusted," Mr Catbagan said.

Mr Catbagan noted that pork offals are relatively low-priced because these products are treated as waste in markets like the US and Canada. "They consider ears, tongue, cheeks, intestines, etc. as waste; but in the Philippines, these are used in our food," he said.

The 5 per cent duty on imported pork offals is mandated through Executive Order (EO) No. 84 issued on 15 March 2002. Under that EO, pork offals -- except for liver -- were to have a 7 per cent duty in 2002-2003 and 5 per cent starting in 2004, while liver was to have a 5 per cent duty from 2002.

In a separate phone interview, Albert R. T. Lim, Jr., president of the Pork Producers Federation of the Philippines, Inc., welcomed the department’s move. "This is, of course, welcomed by the industry. The influx of cheap pork offals is hurting the local hog industry. These items are supposed to be supplied only to meat processors; however, the products are flooding wet markets," Mr. Lim said, adding that imported pork offals are "much cheaper" than locally-produced pork priced at around P170-P180 per kilogram.

Mr Lim could not say for sure how much imported pork offals are now priced in wet markets, Business World reports.

But Jesus C. Cham, president of the Meat Importers and Traders Association, said separately by phone that an increase in the pork offal import duty would be "unreasonable."

"This is unreasonable thinking, because our local hog producers have not developed a market for offals," Mr Cham said.

"Local hog producers sell whole hogs; so, naturally, they cannot compete with those selling by-products which are the offals. The entry of offals also enables consumers to purchase something cheaper," he argued.

Mr Cham added that it is "unreasonable" to say that pork offals should be supplied only to processors. "Products of the processors - for example, longganisa - will reach the markets in one way or another. It is cheaper to buy raw products, so why should it be available for processors only?"

As of 18 November, shipments of pork offals to the Philippines had reached 48,450 metric tons (MT), 67 per cent more than the 29,000 MT imported last year, Bureau of Animal Industry data showed.

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



LEAN HOGS on the CME were off on Monday. DEC’10LH futures finished at $70.025/cwt; down $0.325cwt. The FEB’11LH contract closed down $0.925/cwt at $76.225/cwt. The APR’11LH contract closed at $80.800/cwt; off $0.575/cwt. The large premium to cash and a stronger US dollar seen as slowing exports weighed on prices. Packers were slow to buy on Monday due to stronger cash prices as a result of last week’s buying binge for the holidays. Spreaders sold February and bought December and April. USDA put the average cash pork price at $79.33/cwt; down $0.09/cwt. According to HedgersEdge.com, the average packer margin was raised $4.45/hd to a positive $25.50/hd based on the average buy of $47.55/cwt vs. the average breakeven of $56.83/cwt. The CME lean hog index was placed at 64.17 ¢ /lb; up 0.67 ¢ /lb.

CORN futures on the Chicago Board of Trade (CBOT) were up slightly on Monday. DEC’10 corn futures closed even with Friday’s close at $5.382/bu. The MAR’11 contract closed at $5.532; up0.25¢/bu. The DEC’11 contract closed at $5.100; up 3.0¢/bu. Good demand, and shrinking corn supplies were supportive while a stronger US dollar and lower than-expected exports held gains in check. USDA put corn-inspected-for-export at 23.877 mi bu vs. expectations for 24-27 mi bu. Export customers included Mexico and Russia which announced it was also buying Argentine corn. Even though demand remains strong, gains were limited by a lack of fresh fundamental news. Floor sources said traders were reducing exposure in the market with no new news. They also said that events in North Korea and Ireland, as well as ethanol issues hanging over the market left the pits less willing to take on more risk. US corn supplies as of August 31, 2011 are forecast at a 15-year low of 21 mi tonnes (826.7 mi bu). Funds sold an estimated 1,000 lots. It would be a good idea to price up to 50 per cent of the 2011 crop if you haven’t done so already.

SOYBEAN futures on the Chicago Board of Trade (CBOT) declined on Monday. JAN’11 futures closed at $12.350/bu, off 3.5¢/bu. The MAR’11 contract closed at $12.434/bu; down 3.5¢/bu. NOV’11 soybean futures closed down 0.5¢/bu at $11.580/bu. A firm US dollar and good crop weather in Brazil weighed on prices. Some technical selling and long liquidation was noted. The same world turmoil affecting corn was a factor in soybean prices on Monday. A higher US dollar pressures commodity prices as most raw materials are dollar-denominated, making it more expensive for foreign buyers to import from the US Chinese buying backed off previous expectations after driving soybean futures to 26-month highs earlier this month. USDA reported soybeans-inspected-for-export at 48.948 mi bu vs. expectations for 45-50 mi bu. Basis was steady-to-firm amid slow farmer selling. Basis refers to the relationship between cash prices in a local market and the trading level of national futures for that commodity. Basis reflects local market supply/demand factors: the availability of storage, production levels, consumption patterns, or transportation costs. Local buyers send their willingness/reluctance to buy cash commodities by strengthening/weakening the basis they offer, thereby regulating the flow of commodity from sellers. A weaker basis is one in which futures are gaining on cash markets while a stronger basis signals the cash market is gaining on futures prices. Funds sold an estimated 3,000 lots. It would be a good idea to get to 50 per cent priced in the 2011 crop and to have sold all 2010 soybeans.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $6.502/bu; up 2.0¢/bu. JULY’11 futures finished up 3.75¢ /bu at $7.282/bu. Wheat was the strongest commodity on Monday. Exports and dry weather were supportive. USDA put wheat-inspected-for-export at 20.818 mi bu vs. 14-18 mi bu. Jordan tendered an offer for 100,000 tonnes (3.674 mi bu). Dry weather in the US Plains and heavy rains in southeast Australia were seen as slowing wheat supplies. Wheat cash prices were steady-to-firm as export basis bids for soft-red-winter-wheat gained as much as 5.0 ¢ /bu at the US Gulf market Monday. Funds bought an estimated 3,000 lots. It would be a good idea to price up to 65 per cent of the 2011 wheat crop

Marubeni to take on big five crop traders
[2 December 2010] Japan’s biggest grain trader Marubeni aims to take on the world’s largest agricultural commodity traders by shipping more crops on the back of strong demand for food in emerging Asia. FT.com reported that Marubeni and competitors Itochu, Mitsubishi, Mitsui and Sumitomo are shifting its focus from importing oil and other commodities to their resource-poor home market to abroad. It has identified agricultural commodities as a source of growth as concerns of food security spread in Asia.

Philippine buffalo meat imports down
[2 December 2010] Philippine imports of buffalo meat fell 3.72% in the first ten months of 2010, the Philippine Association of Meat Processors Inc (PAMPI) said. Data from the Bureau of Animal Industry shows that from January-October 2010, imports of buffalo meat was 35,680 tonnes, down from 37,060 tonnes year-on-year. PAMPI Executive Director Francisco Buencamino said that the Filipinos’ purchasing power remains low, which has led to lower demand for canned goods like corned beef and meat loaf. He added that the USD 2-3/kg increase in the price of buffalo meat may have discouraged importation. The meat processing industry is hoping that demand will pick up during the Christmas season, which traditionally is when demand for products like ham are at their peak.

I have been asked what am I talking about here.Well,no other farm or person that I know of in the Philippines has come up with the idea of breeding a meat goat built on the back of the red boer (kalahari red or roan) in english,why.In the world of livestock breeding,medium size animals require less feed to produce than large animals and the end result is the same.Also it is well known that a meat breed mixed with a dairy breed has more moisture in its meat meaning better quality overall.In short this elite redline for us will be our signature series for district#1 of N.Oriental.Future meat goats coming from N.Oriental,district #1 in the future we hope will be of this new breed.Red in colour with a medium build and with more than enough milk production to nurse its kid(s).Rural farmers face the problems of feed and feed adds to any producers bottom line.We know and expect animal feed prices will continue to rise from today and into the future and when feed prices become too expensive people tend to leave that part of livestock production and look for something more of a sure shot.The orginal boers were bred for high production and low maintenance,today worldwide the boer has lost its orginal purpose and has become an animal that requires more care than ever intended for.In my opinion,a goat that is bred for low maintenance will have a better chance for success in the rural areas.Worldwide those who are able to produce protein cheap are the ones who are successful and those who cannot are out of business very quickly.Free trade also has a part here,example is the chicken and pork.Countries with governments that subsidize grain,corn and soya beans are the ones who produce livestock the cheapest.The smart producer is the producer with a winning formula for cheap livestock production.

With the number of producers in this business,very few publish any or all their findings.Without more data being published its really hard to tell what is really happening with goats in the country.

House lobbies to stop chicken, pork imports
[1 December 2010] Philippine lawmakers want the Government to stop the importation of chicken and pork, saying they are flooding the market and killing the local livestock industry, but the Agriculture Department refused to support the proposal last week citing that it could violate international trade agreements. While hearings are underway for the proposal, investigations revealed that there was no shortage in the supply of both proteins but imports of choice chicken cuts in the Philippines have risen 130% to 49 million kg in the first half of 2010.

FAO Food Outlook - November 2010
The latest Global Market Outlook for animal products from the UN Food and Agriculture Organization (FAO).


Focus
International prices of most agricultural commodities have increased in recent months, some sharply. The FAO Food Price index has gained 34 points since the previous Food Outlook report in June, averaging 197 points in October, only 16 points short from its peak in June 2008. The upward movements of prices were connected with several factors, the most important of which were a worsening of the outlook for crops in key producing countries, which is likely to require large draw downs of stocks and result in tighter global supply and demand balances in 2010/11. Another leading factor has been the weakening of the United States Dollar (US Dollar) from mid-September, which continues to sustain the prices of nearly all agricultural and non-agricultural traded commodities. The increase in international prices of food commodities, all of which accruing in the second half of 2010, is boosting the overall food import bill in 2010 closer to the peak reached in 2008.

The pressure on prices to rise was first felt in the cereal market, most notably for wheat and barley, in August. This prompted FAO to call for an extraordinary meeting on 24 September 2010 to discuss the underlying causes and possible remedies. The meeting clearly identified the importance of reliable and upto- date information on crop supply and demand to cope with unexpected developments in world markets. More transparency and a better understanding of the role of commodity futures markets and government responses were also viewed as necessary to address price volatility. The full report of the meeting is included in the Special Feature section of this issue of Food Outlook.



FAO Food Price Indices
(October 2009 - October 2010)
Attention is now turning to plantings for the next (2011/12) marketing season. Given the expectation of falling global inventories, the size of next year’s crops will be critical in setting the tone for stability in international markets. For major cereals, production must expand substantially to meet utilization and to reconstitute world reserves and farmers are likely to respond to the prevailing strong prices by expanding plantings. Cereals, however, may not be the only crops farmers will be trying to produce more of, as rising prices have also made other commodities attractive to grow, from soybeans to sugar and cotton. This could limit individual crop production responses to levels that would be insufficient to alleviate market tightness. Against this backdrop, consumers may have little choice but to pay higher prices for their food. With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared.

Meat and meat products market summary
World meat trade is forecast to grow by 2.8 per cent in 2010, to 26.1 million tonnes, sustained by a brisk growth in pig meat, but also by gains in bovine and poultry meat. However, in the case of poultry, the most widely traded meat, the expansion of world exports is likely to be constrained by the imposition of sanitary restrictions by major importers. Increased purchases from Asian countries are expected to fuel much of the expected increase of meat trade, more than compensating for a 15 per cent reduction of imports by the Russian Federation, which had emerged as the second largest meat importer in 2009, after China.



World meat markets at a glance
According to the FAO Meat Price Index, world meat prices between January and October 2010 averaged 14 per cent higher than in the same period in 2009, and similar to the levels witnessed in 2008.



FAO international meat price indices
(2002-2004 = 100)
Dairy market summary
Strong import demand from Asian countries and the Russian Federation has driven dairy product trade to historically high levels in 2010, with the demand largely met by higher exports from New Zealand and the United States. Dairy product prices in international trade have remained firm, in particular butter, which in October reached an all-time high.



FAO international meat price indices
(2002-2004 = 100)
FAO’s latest forecast of world dairy production for 2010 stands at 710.7 million tonnes, 1.7 per cent more than last year. Production in developed countries is forecast to grow by around 1 per cent, while that of developing countries may increase by 2.4 per cent. On a per capita basis, consumption of milk and milk products in developing countries may increase by 1 kg per capita in 2010, from 66.4 to 67.5 kg, fuelled by strong economic growth in Asia.



FAO international dairy price index
(2002-2004=100)
Fish and fishery products market summary
On average, the latest trade information indicates that two years after the drastic fall at the end of 2008, prices in September 2010 were only 1 per cent below the peak of September 2008, with aquaculture prices 11.6 per cent higher whereas prices of wild species were 10 per cent lower. According to the FAO Fish Price Index, prices over January to September were, on average, 8.5 per cent higher year-on-year.

Aquaculture producers of many of the exported commodities responded to the economic crisis in late 2008 and throughout 2009 by reducing stocking levels, thus affecting future production. Since then, demand in many developing countries has rebounded, especially in Asia and South America. Developed country demand for farmed products is picking up, and prices for products such as shrimp, catfish, tilapia and salmon have risen significantly in 2010. For capture fisheries, the picture is more mixed with some prices negatively affected by large harvests, whereas others have strengthened as lower fishing quotas resulted in reduced supply.



World fish market at a glance
The price outlook for the rest of 2010 and early 2011 is positive, with demand firming in most markets and supply expected to remain stable.



The FAO fish price index (2005=100)

US Pork Outlook - November 2010
Next year, the US pork industry will struggle to adjust to expected higher feed costs, and output is expected to be 1.5 per cent above the 2010 level, according to the latest Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service.

 

Summary
Higher hog weights and higher-than-expected pork cold stocks were factors in lower October hog and pork prices. Next year, the US pork industry will struggle to adjust to expected higher feed costs, with little attention given to expansion. Pork production next year is expected to be 1.5 per cent above the 2010 level. Lower third quarter exports are likely attributable to higher US pork prices.

Higher Hog Dressed Weights Pressure Prices
Prices of both hogs and pork declined sharply in October, as pork supplies increased with accelerating seasonal slaughter numbers and skyrocketing hog weights. The October price of live equivalent 51 to 52 per cent lean hogs was $52.14 per cwt. While more than 39 per cent higher than in October 2009, hog prices last month were 13.6 below prices in September, almost double the average six to seven per cent September- October drop-off seen in recent years. On the pork side, the wholesale carcass cut-out in October was $79.91, almost 45 per cent above a year earlier. But in recent years, the seasonal drop-off between the September and October cut-out has averaged between six to seven per cent. This year, however, the October cut-out fell almost 12 per cent below wholesale prices in September.

While prices of hogs and pork typically decline as hog slaughter numbers increase to their annual fourth-quarter-highs, 2010 prices of hogs and pork fell more sharply than in recent years. This could be due in part to two factors: first, on the supply side, live and dressed weights of hogs in October were much higher than expected. Second, on the demand side, prices of pork bellies peaked in mid-September and declined through October, pushing the USDA wholesale pork cut-out down. With respect to hog dressed weights, estimated average daily carcass weights in October 2010 were four pounds heavier than average daily weights a year ago and 5.3 pounds above the three-year average. Estimated carcass daily weights in October, which averaged 207 pounds for the month, were five pounds heavier than average federally inspected dressed weights in September. The figure below shows the wide positive October gap between estimated daily average carcass weights this year and 2009 and the 3-year average.



While it is impossible to pinpoint the cause(s) of heavier weights with precision, there is strong anecdotal evidence to suggest that feed quality and weather contributed to heavier animals in October. To the extent that last year’s corn crop was of poorer nutritional quality, switching to feeding with new-crop corn has probably accelerated weight gains that typically come about as the weather turns cooler in the fall. Thus, the switch to new-crop corn in hog rations combined with cooler temperatures likely created conditions that supported weight gains. On the flip-side however, heavier weights and resulting larger pork supplies probably contributed to lower pork and hog prices in October.

USDA lowered fourth-quarter prices of 51 to 52 per cent lean hogs to $50 to $52 per cwt, down from $53 to $55 per cwt last month. The fourth-quarter pork production forecast was increased 73 million pounds to 5.925 billion pounds, based on higher average dressed weights.

The major challenge – and source of uncertainty – for the US pork industry in moving forward is higher feed costs and how the US industry will adjust to them. Producer returns calculated with USDA forecasts of feed and hog prices show a decline from October, but still-positive returns through 2011. It is more than likely that 2011 will be a year in which the industry struggles to acclimatise to higher feed costs, without much attention to expansion. Minimally positive farrowings next year, along with higher dressed weights resulting from better nutritional values in new-crop corn, are expected to put commercial pork production next year at 22.6 billion pounds, an increase of 1.5 per cent over this year. The slightly higher production increase anticipated next year, compared with last month’s production forecast, is a result of higher expected average dressed weights offsetting slightly lowered forecasts of farrowings in 2011.

Third-Quarter-Pork Exports Slide
Third-quarter pork exports were 952 million pounds, down 5.4 per cent from the same period a year ago. With the exception of Canada, all major US export markets were year-over-year lower in third-quarter 2010. Lower exports are most likely attributable to elevated US pork prices in the July-September period. The wholesale cut-out averaged $88.94 per cwt, more than 56 per cent higher than the average wholesale price of $56.94 per cwt a year earlier. With a competitive US dollar vis-à-vis major trading partners, and with economic recovery proceeding in advance of the US economy’s growth rate in most parts of Asia, Mexico, Canada and Australia, high US prices appear to be a major factor explaining weaker third-quarter foreign purchases of US pork. The 15 largest foreign destinations for US pork in the third quarter are listed below.

Third quarter US pork imports were 13 per cent higher than a year earlier, at more than 237 million pounds. The largest foreign shipments came from Canada (13.2 per cent higher compared with a year ago) and from Denmark (0.3 per cent lower compared with the same period last year). Lower US production this year was likely an incentive for third-quarter imports.

Live swine imports were down only 2.5 per cent in the third quarter, at 1.479 million head, the lowest quarterly decline, in percentage terms, since swine imports turned lower in the second quarter of 2008. Lower imports of segregated early-weaned animals (weighing less than 7kg) and slaughter-ready animals offset year-over-year higher imports of feeder pigs (animals weighing between seven and 23kg) and breeding animals.

European Union Faces Pig Meat Shortfall
EU - European Union production of pig meat could fall by nearly 3m tonnes over the next three years, according to the National Pig Association.


Following a survey of producers and producer representatives in member countries, it forecasts production will be:

-4 per cent in 2011, down approx. 880.000 tonnes.
-5 per cent in 2012, down approx. 1,060,000 tonnes.
-5 per cent in 2013, down approx 1,007,000 tonnes.
The falls will mean higher prices at retail, particularly for countries that are net importers of pig meat, so British retailers and processors should start working more closely with British producers to improve supply chains, says NPA.

NPA’s forecast is the first serious attempt in Europe to analyse the effect of a number of bearish influences on pig production, which will come to a head over the next three years. These include low prices, high feed costs, the European stalls ban (due to come fully into force in January 2012), currency volatility, and nervousness among banks about the sustainability of continental pig production.

NPA has sought the views of pig farmers and industry representatives in a number of countries, particularly Denmark, Germany, France, the Netherlands and Poland, which combined produce more than two-thirds of European Union pigmeat.

Many continental pig-keepers have been producing at a loss for nearly half a decade and are poorly placed to survive the next three years. At least a third of them will have difficulty converting from stalls to loose-housing by 2012, in compliance with European Union law. It costs over £400 per sow place to convert to loose-housing and the 1999 stalls ban in the United Kingdom caused the national herd to almost halve during the following ten years.

“In making our forecast, we have been at pains to study relevant data-sets and to survey producers and producer representatives in the main pig-producing countries of the European Union,” said NPA general manager Barney Kay. “We have also considered the views of European Commission officials and revisited our own data on the effects of higher feed costs and converting from stalls to loose-housing.

“Nevertheless, we acknowledge we may have understated the problems facing the European industry, because many continental producers do not know themselves yet whether they will convert to loose-housing by January 2013, or cease production by that date, or continue to use stalls and hope to avoid detection. Their decision will be influenced by several factors, including the size of next year’s wheat harvest, exchange rates, the economic outlook for the eurozone, and the attitude of banks to lending money.”

Production Costs May Determine Profitability for Hogs
CANADA - A US-based agricultural economist projects production costs, particularly feed costs, will be the biggest factor affecting profitability in the North American hog industry this winter, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

FarmScape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
US projected beak-even costs for raising hogs for next year have climbed from the low to mid 60s on a carcass weight basis in July and August to the mid 70s and as high as 78 or 79 dollars.

Paragon Economics president Dr Steve Meyer told those on hand last week for Saskatchewan Pork Industry Symposium 2010 corn is the largest feed ingredient and drives feed prices.

Dr Steve Meyer-Paragon Economics
We're going to see a big battle for acres next spring as corn, soybeans, wheat, even cotton fight over the available tilled acres in the US and so I think costs are going to be the issue.

This year of course the corn crop was thought to be very very good early on and it kind of got smaller and smaller as we got toward harvest.

It's still going to be the third largest crop on history but still because of when it happened, because we realize that it's going to be a short crop the season average corn price is going to be the highest on record.

The ethanol situation is still the driver.

There will be possibly some changes in policy on the blenders tax credit and the tariff but those plants are already out there and they're still going to make ethanol out of corn.

If those policies, the tax credit and the tariff are changed that could help prices some but it's not going to push us back down significantly lower than where we are now.

Dr Meyer says hog prices are always important for profitability but the futures indicate prices will be reasonably good next year if we can manage our costs.

He says, given these higher feed costs, feed efficiency will be critical and suggests fine tuning diets and checking feeder adjustments to make sure there isn't any feed going into the pit, optimizing selling weights and keeping an eye on other input costs such as energy.