Pork Commentary: EuroTier Report
GERMANY - "We spent the last week at EuroTier in Hannover Germany. Eurotier calls itself the largest livestock exhibition in the world," writes Jim Long.


Jim Long is President &
CEO of Genesus Genetics.
After seeing it for four days, we have to agree.

Our Observations
EuroTier is massive. The site in Hannover covers hundreds of acres. The size of the buildings is mind-boggling. Some exhibitors such as Big Dutchman appear to have had thousands and thousands of square feet in exhibit space. There were many other displays that were large with hundreds of thousands of dollars for space, display, hospitality, and manpower being spent by several exhibitors. It was professional, and it was costly.


To understand some of the scope of detail was the expense by several exhibitors to purchase and outfit their exhibit personnel in matching suits, shirts and ties. Nothing was left to chance as the bi–annual EuroTier event is the major livestock exhibit in the 14 million plus sow industry of the European Union.


There were few exhibitors from the swine industry of North America at EuroTier. Genesus was the only large-scale swine genetic company based in North America that showed up to exhibit. There were 51 Chinese-based companies at EuroTier exhibiting their products. It is not hard to see which national group is the most aggressive is it. We never figured out why so many companies sit at home and wait for the phone to ring.


The European exhibitors we talked to told us the show was excellent for them. There are significant renovations of swine complexes and new buildings in central and Eastern Europe. There was certainly a positive feeling to the exhibition.


At the exhibitio,n there was a large contingent of Russian people looking at pig production expansion and/or investment. Russian pig producers should be making about $135 per head. That is a great stimulus for thinking being a pig producer is a good thing.


European 27 has about 14 million sows. It is a mature market like North America. We went as we have come to realise that our company, Genesus, is more than competitive with all the major genetic companies from Europe that have come to North America. Mature markets like Europe are margin-challenged and the only way for producers to prosper is to use all the technology and tools available to drive down costs and increase productivity. We see great opportunities for Genesus in Europe.
EuroTier was a positive environment and if was good to see a swine industry with hope. This despite high feed costs and having had to live with low margins. The world pork industry is providing 44 per cent of meat protein globally. The opportunities for pork producers as global disposal income increases is a positive that should help to keep us going each and every day.

Other Observations
June lean hogs closed Friday at $89.15 lean. This is getting closer and closer to 90 cents. If liquidation continues, we expect to see $1.00 lean hogs next summer. High feed prices are going to make less hogs. The sad part is high feed prices are not making 90 cent hogs a bonanza!

We have to watch chicken numbers. That industry has been on a path of destruction with production jumping five to six per cent year over year in the face of high feed prices. Let’s see if they blink. Last week’s year-over-year egg sets were only up one per cent. For all meat groups to have enhanced profitability in the coming months, chicken numbers need to stay close year over year. Last time corn hit $6.00 a bushel, Pilgims Pride – the world’s largest chicken producer – went broke. Maybe the chicken guys can open their history book. The old adage ‘this time it will be different’ never seems to play out.


Author: Jim Long, President & CEO, Genesus Genetics 

Higher Hog Prices Forecast by Purdue Economist
US - Hog producers have been feeling the bite of losses once again this fall, but Purdue University Extension economist Chris Hurt thinks there is reason for some optimism.



For starters, Professor Hurt says hog prices are probably at their seasonal lows in late November as consumers are buying their Thanksgiving turkey rather than pork. Second, he says lower corn and meal prices provide an opportunity to lock in feed prices at levels that were not available a few weeks ago.

Professor Hurt expects first quarter hog prices to average near 55 dollars per live hundredweight, with second and third quarter prices stretching to 62 and 61 dollars, respectively. Fourth-quarter prices are expected to drop to the mid-to-low 50's, according to BrownfieldAgNews.

Professor Hurt's estimated returns per head, by quarter, for 2011 are: minus four dollars in the first quarter; plus 14 dollars in the second quarter; plus 16 dollars in the third quarter; and plus one dollar in the fourth quarter, for a 2011 average near seven dollars per head.

Foreigners’ access to farmland must follow guidelines
[30 November 2010] UN Special Rapporteur on the Right to Food Olivier De Schutter recently warned of risks in unbridled foreigners’ access to farmlands. He said that efforts must be made to ensure that foreign access to local agricultural lands follow strict guidelines. Countries like China, India, South Korea, Saudi Arabia and Kuwait, as well as Wall Street banks like Goldman Sachs and Morgan Stanley have been in the forefront of acquiring large tracts of lands in Asia and Africa, which had become even more intense following the spike in food prices in 2008. Foreigners’ access to farmland must follow guidelines

FAO calls for higher investment in agriculture
[24 November 2010] The global food import bill could pass the one trillion dollar mark in 2010, a level not seen since food prices peaked at record levels in 2008 said FAO Director-General Jacques Diouf. "The food price and economic crises have had a severe impact on millions of people in all parts of the world," he said. In recent months the international prices of most agricultural commodities have increased, many of them sharply. The key to long-term food security lies in boosting investment in agriculture, particularly in low-income food-deficit countries. He aded that structural changes can improve food security. In the short term, this means targeted safety nets and social protection programs as well as reliable and timely information on food commodity markets. In the medium and longer terms, however, investment in agriculture is the answer.

World poultry and livestock growth up 2%
[29 November 2010] The US Department of Agriculture (USDA) reports that world pork production is forecast to rise about 2% to 103.4 million tonnes with China accounting for 80% of this increase. Broiler production is forecast up 2% to a record 76.2 million tonnes, thanks to record levels from all top producing countries. China and Thailand are expected to expand exports, particularly to other Asian markets. The USDA advises Asian producers to look into cost control to cope with rising feed costs and food safety in response to consumer demands, through better technology and business solutions.

Philippines heightens bird flu alert
[22 November 2010] Following reports of a new human case of H5N1 avian influenza in Hong Kong, the Philippines has heightened its efforts to keep the country free from the disease. The Philippines is just one of three countries in Southeast Asia that remains free of the H5N1 AI virus since its resurgence in Asia in 2003. Government officials however, have cautioned Filipinos not to panic as measures are already in place to keep the virus out. Airport and seaport officials have stepped up health checks and scans on incoming passengers. Meanwhile the Department of Agriculture is already closely monitoring the entry of all  poultry and livestock into the country to keep the AI virus at bay.

word has it,goats under this program are now testing positive for CAE in the Philippines.Funny thing all these goats passed a number of tests for different illnesses like CAE,CL and Johns desease and many more while they were still on American soil.The test for CAE is questional at best.A goat can test positive one time and in 6 months time test negative,the same goat.Who really knows what the true story is here.

Doc
there is a reddish/brown chicken in the Philippines.I am not sure what they call it,I call it a Rhode Island Red,looks like one.This chicken is known as a dual purpose chicken,lays brown eggs.The problem with this breed is,takes more food to produce eggs over the white layers.As a meat bird cannot compete with the 45 day chicken,takes alot longer to produce meat.The interesting thing is tho,can become a range chicken.

EUROTIER - How China Could Save 17.5MT of Sow Feed
GERMANY - Pig specialists from China and the West came together yesterday (17 November) for the 2nd Chinese-European Pig Summit held in conjunction with EuroTier 2010, writes Jackie Linden. If the productivity in China could be increased from the present average (13 piglets per sow per year) to 20, the same output of pork meat could be achieved with 17.5 million fewer sows, said one of the speakers.



The 1st Chinese-Europe Pig Summit two years ago at the previous EuroTier was considered such a success that a follow up event was organised in conjunction with EuroTier 2010 in Hanover, Germany.

This time, the event attracted even higher attendance by representatives from government, equipment, feed and genetics companies, research and academia on both sides for the one-day Summit focussing on global trends and opportunities for China's pig production and pork processing markets.

Organisers, DLG and the China Animal Agriculture Association (CAA) highlighted that pig production in China is soaring, even as the global feed industry tackles the challenges of serious diseases and poor grain harvests. Regulators are also focusing more than ever on animal welfare in relation to pig housing and management, they stressed.

Also in association with the European Pig Producers (EPP) and moderated by Peter Best, the Summit aimed to address issue of mutual interest relating to pig health, animal welfare and regulatory concerns as well as China's goal of self-sufficiency in pork.

Welcome addresses were given by Carl-Albert Bartmer (president of the DLG), Clemens Neumann (Department Head at the German Federal Ministry of Food, Agriculture and Consumer Protection) and Dr Shen Guang (Secretary General of the CAAA).

Dr Andrea Gavinelli, head of the Animal Welfare Unit on the European Commission's Directorate-General for Health and Consumers, gave an overview of the the animal welfare and animal health policies in the EU. He stressed that these two issues are key for improving the sustainability of pig farming. Among the coming regulations is the one, much discussed, of the ban on stalls for housing pregnant sows (between four weeks after service and one week prior to expected farrowing) from January 2013. In answer to a question, Dr Gavinelli confirmed that all EU Member States must comply with this regulation by the stated deadline.

China's policy of moving towards self-sufficiency in pig meat was the topic covered by Dr Ma Chuang, deputy secretary of the CAAA. In his presentation, he said that if China could raise the average productivity of sows from the present 13 to 20 piglets per sow per year, the same output could be achieved with 17.5 million fewer sows, offering savings of around 17.5 million tonnes of feed and 10.5 million tonnes of maize.

Future-orientated animal health programmes were discussed by Dr Gerald Behrens, head of Marketing Food Producing Animals for Boehringer Ingelheim Animal Health. He explained for sustainability can be achieved in the industry profitably.

The final session in Summit was on the regulation of pig production in China and Europe. The present and coming regulations in the EU were described by Dr Robert Hoste, agricultural economist with the LEI, Wageningen University, and the practical view of a pig farmer was given by Erik Thijssen (piglet producer and president of the EPP).

Finally, Dr Wang Lixian of the Chinese Institute of Animal Sciences (CAAS) described

CME: Effect of Growing Risks in Europe and Asia
US - Livestock and grain commodity markets were sharply lower on Tuesday as large traders sought to trim their long positions in light of growing risks in Europe and Asia, write Steve Meyer and Len Steiner.



Last spring, fears of a Greek debt default sowed panic in markets, not so much because of the size of the potential Greek default but rather the implications that it would have for the Euro Zone as a whole. The situation in Greece is far from resolved and it remains to be seen whether Euro members are willing to bankroll an ever expanding tab of Greek profligacy.

More recently, debt markets have been rattled by reports that the budget hole in Ireland, another country suffering from the post-bubble hangover, appears to be much deeper than previously thought. This has begun to tinge the credibility of other EU countries thought to have heavy debt burdens. Adding to the renewed panic about debt defaults in Europe, market participants responded to reports that China, a significant buyer of global raw materials, would impose price controls on a number of food staples and production materials. Based on overnight trading, it appears that the markets may open higher on Wednesday but volatility will remain high for the foreseeable future.

The panic selling of commodities on Tuesday overshadowed news that the US would lift the ban on imports of beef and pork products from the Brazilian state of Santa Catarina. The so called final rule was published in the Federal Register on November 16 and it comes into effect on 1 December. As we have discussed in the past, the rule is much more important with regard to the precedent that it sets rather than the actual impact on the supply of imported beef and pork in the US market.

 


We do not expect any beef imports of any appreciable quantity to come into the US anytime soon and Brazilian officials indicated that they expect only about 10,000 MT of pork to come into the US next year, less than 0.05 per cent of the 8.5 million MT of pork that will be consumed in the US in 2011. The precedent, however, is important as it does open the door to more beef and pork coming into the US from markets that are currently closed to US importers. APHIS, (USDA’s Animal and Plant Health Inspection Service) has worked in recent years to develop policies based on the concept of regionalization.

The basic premise is that political boundaries do not properly reflect disease risk and APHIS “will consider the importation of a commodity from a specific region of a country even though other parts of that country may be affected by an animal disease.” This is especially important for large countries, such as Brazil, with areas (e.g. the Amazon) where certain animal diseases will likely never be eradicated. Based on the concept of regionalization, we could see more Brazilian beef and pork coming into the US in the coming years, however, the process will likely be quite lengthy and deeply political. Finally, keep in mind that while most larger protein producing countries do want access to the US market, most of the growth in global protein consumption is not taking place in the US but rather Asia and developing economies. And the focus of US industry should be on expanding access for US exports, rather than erecting barriers to imports.

Philippine chicken producers call for import freeze
[19 November 2010] With the local market suffering from oversupply, chicken producers in the Philippines have asked the government to stop imports of frozen chicken until the end of the year. In a report by BusinessMirror, United Broiler Raisers Association President Gregorio San Diego said that as of October, the inventory of frozen chicken in local cold storage facilities is already 10 million kg, which he said is an “all-time high, and that the group has been told by a Department of Agriculture official that “around 5 million kilograms of chicken imported under the Minimum Access Volume (MAV) are set to arrive in the country. We hope the government would consider suspending MAV imports.” Industry observers say that the current inventory of chicken in the Philippines is enough to meet demand and that further imports will just exacerbate the existing oversupply situation.

Argentina set to start beef exports to China
[19 November 2010] Argentina is set to start exporting beef to China before the end of the year, after striking a deal over animal-health requirements. Argentina’s International Trade Secretary Luis Maria Kreckler said an official trade agreement is expected to be signed between the two countries after the visit of Brazilian agricultural secretary in China at the end of November. Argentina was the world's No. 4 beef supplier in 2009. According to a report by Argentine Meat Industry and Trade Chamber, beef production is decreasing in Argentina where the national herd has shrunk by 10 million heads in the last three years to about 48 million.

Jollibee post USD 16.31M proft in  3rd qtr
[18 November 2010] Philippine fast food giant Jollibee Food Corp (JFC) posted nearly USD 16.31 million in profits in the 3rd quarter of 2010, thanks to bigger sales in both the local and overseas operations. This boosted the company's net profit by 16.2% to USD 49.31 million from in the first nine months of the year. Sales from local and overseas operations rose to more than USD 1.16 billion by end-September 2010, or 9.7% from the same period last year. JFC has a total of 1,555 stores in the Philippines, made up of the flagship Jollibee outlets, Chowking, Greenwich Pizza Red Ribbon bakeries, and Manong Pepe restaurants. Recently, the company announced its decision to acquire a 70% stake in the Mang Inasal Philippines chain of restaurant that has 303 stores nationwide.

Hunan knocks a hole in Asean pork market
[18 November 2010] More uncooked pork products from China are expected to land in Asean countries.  Taking the lead is Yiyang Meat Joint Processing Plant in China’s southern province of Hunan that shipped some 100,000 tonnes of chilled pork worth of USD 47,800 to Malaysia in November this year. The plant completed registration at the Department of Veterinary Services (DVS) in Malaysia and has become the first of its kind among its Chinese counterparts. Since China-Asean FTA took effect this year, Hunan has restarted exporting frozen porket to Singapore. The province, a major pig producing region in China, kicked off exports of frozen pork to the Philippines in April.

Agri Growth Dips in January to September 2010
PHILIPPINES - Despite the Department of Agriculture’s interventions to minimize the effects of El Nino from January to September 2010, the country’s agriculture sector slowed down by 2.62 per cent, even as the poultry, livestock and fisheries subsectors posted positive growth rates.



The prolonged dry spell exacted a heavy toll on the crops subsector, as it declined by 7.2 per cent. The late onset of the rainy season delayed planting of palay (unmilled rice) and corn to July and August. Hence, the bulk of palay and corn harvests will be accounted in the fourth quarter.

In terms of value, total agricultural production grossed P882.7 billion at current prices.

The poultry, livestock and fisheries subsectors—combining for about 56 per cent of total agricultural output—posted positive growths of 3 per cent, 1 per cent and 0.7 per cent, respectively.

The value of production of the three subsectors amounted to P428.9 billion (B), led by fisheries (P163.6B), livestock (P152.1B), and poultry (P113.2B).

On the other hand the crops subsector, contributing 44 per cent to total agricultural production, dipped by 7.24 per cent. Total gross output was valued at P453.9 billion at current prices.

Production of palay and corn dipped by similar 15 per cent to 9.27 million metric tons and 4.73 million metric tons, respectively. Total palay harvest amounted to P140.6B, and P51.9B for corn.

Other major crops, however, registered positive growth rates, led by tobacco (up by 11.6 per cent), mango (7.6 per cent), banana (1.2 per cent) and abaca (1 per cent).

The poultry subsector grossed P113.2B at current prices, contributing 15.5 per cent to total agricultural output. Chicken production grew by 2.8 per cent to P84.3B, and egg production went up by 5.9 per cent to P24.8B.

The livestock subsector grossed P152.1B at current prices, accounting for 12.7 per cent of total agricultural output. Production of hogs increased by 0.8 per cent to P124.8B, carabao grew by 3.6 per cent to P7.1B, and dairy was up by 14.6 per cent to P359M.

The fisheries subsector inched up by 0.7 per cent, with a total value of P163.6B, accounting for 27.4 per cent of total agricultural output. Aquaculture production was up by 1.9 per cent to P59.9B, municipal fisheries grew by 0.5 per cent to P58.2B, and commercial fisheries went down by 1.8 per cent, valued at P45.5B.

Overall, farmers once again enjoyed better prices for their products as average farmgate prices increased by 5.8 per cent.