Seasonality in Pigs
A summary of the findings to date from a research project carried out by the Faculty of Biological Sciences at the University of Leeds, published by BPEX in its series, Research into Action, number 10.
 
The research involved analysing a large data set as well as the weather, topography and staffing parameters to see what has an effect on production over summer and autumn.

For outdoor sows in the UK, several days of warm weather (average daily temperature above 18°C) during lactation and around weaning results in reduced and more variable farrowing rates in comparison to when temperatures are below 18°C.



Farrowing rate in relation to five consecutive days of weather conditions for five weeks prior to service date
Sow heat production increases as lactation progresses in line with increasing milk production; hence heat production, and so susceptibility to developing heat stress, is greatest just before weaning.

If environmental temperatures are warm then the sow may reduce her feed intake such that it fails to meet the metabolic demands of lactation; she will then mobilise her own body reserves to meet the ongoing requirements of lactation resulting in reduced body condition and possible adverse effects on developing ovarian follicles. Nutritional deficits are associated with reduced luteinising hormone (LH) production, resulting in delayed returns to oestrus and reduced conception and farrowing rates.

In this study, gilts were found to be the least affected by warmer temperatures, probably because they do not have the increased metabolic demand of lactation prior to service.

In order to cool down in warmer weather, sows redirect their blood flow to their skin and mammary tissues, away from the ovaries. The quality of their eggs and the readiness of their uterus for pregnancy may therefore be negatively affected.

The findings from this research suggest that cooling facilities should be provided to outdoor sows in the UK when daily average temperature rises above 18°C.

Management Guidelines
Monitor sow feed intake in warm weather. If sows are not eating, take steps to cool them down or provide more energy-dense feed


Provide wallows early on in the year as well as throughout summer, or sprinklers for sows to cool down in. In individual paddocks you could create a spray of water from the sow drinkers, providing an area of mud in which the sow can stand or wallow


Paint farrowing arcs white to reflect sunlight and reduce the temperature inside; painting huts white can reduce internal arc temperatures by around 7°C


Use insulated arcs, fully insulated where possible; combining this with painting arcs white will have an additive temperature reducing effect


Use an adjustable ventilation opening at the rear and re-align arcs to assist with air flow


Feed sows twice a day if not on an ad-lib system.



August 2011

Friday, August 12, 2011
Measures to Increase Chilled Pork Belly Imports
SOUTH KOREA - The price of pork belly meat – the most popular pork cut in Korea – has gone through the roof in recent months due to local shortages resulting from the country's devastating outbreak of foot and mouth disease (FMD) when more than three million pigs, equal to one-third of total inventory, were culled.
 

A report from the USDAS Foreign Agricultural Service says that the average retail price for domestic fresh bellies in July 2011 was 23,730 won/kg, up 43 per cent from November of last year, just before the FMD outbreak.

In response, the Ministry of Strategy & Finance, which is leading the interagency charge to curb rising consumer inflation, has cut the duties on 260,000 metric tonnes of imported bellies and other pork cuts on several occasions to help stem the pain at the register.

With the current duty reduction, imported belly meat is currently selling at less than half the price of domestic bellies at 11,500 won/kg for fresh and 8,500 won/kg for frozen.

Nevertheless, retail belly prices remain at historic highs.

In addition to the tariff cuts, the Ministry for Food, Agriculture, Forestry & Fisheries (MIFAFF) announced on 19 July support measures to jump start imports of fresh and chilled belly meat in hopes of lowering domestic prices.

The MIFAFF measure is focused on fresh/chilled belly meat for two main reasons. First, Korean consumers prefer fresh bellies over frozen, especially during the summer grilling season. Second, importers are reportedly having a tough time securing bellies on the international market.

The measure contains five main pillars to help lower fresh/chilled belly meat prices:

price support incentives;
incentives for contracting under the emergency government purchase of 10,000 metric tonnes;
the domestic selling price on the government-purchased meat would be cut by about 10 percent;
support payment to offset air freight expenses for imports outside the emergency government purchase; and
request to consumers to eat other pork cuts and local beef.
These incentives are effective until 20 August.

With respect to price support incentives, the Korea Agro-Fisheries Trading Corporation (aT), which is the government-run state trading entity, will temporarily act as middleman in the transaction between the importer and customer.

In particular, aT will pay the importer the contracted price and will then sell the meat at a discount to the customer depending on prevailing domestic prices and when the product arrives in Korea.

On 21 July, aT opened an emergency tender for 10,000 metric tonnes of chilled belly meat, which will more or less be a consolidated purchase on behalf of the local importers.

The tender closed on 26 July.

The product will be sold at about a 10 per cent discount to local buyers, depending on the prevailing market price when the product is released into the market.

There are a couple reasons for making the purchase in this fashion.

First, the government wants to publicly demonstrate its deep-seated resolve to fight inflation by making such a large purchase.

Second, some importers were reportedly worried about customers, who knowing that the product had a limited shelf life, were holding out for a discount.

According to local trade sources, only a portion of the 10,000 metric tonnes tender will likely be filled because of the limited exportable supplies of fresh belly meat in the United States, Canada and Chile.

Producers in these countries make more money by producing bacon and spare ribs from the belly. Please refer to pork import statistics at the end of this report for more details.

The measure urges Korean consumers to eat other pork cuts, like Boston Butt and tenderloins.

It also calls for consumers to eat more beef to help prop up sagging cattle prices due to the record cattle inventories.

However, changing dietary patterns even when prices are high takes time.

Friday, August 12, 2011
Iowa Leads Project to Reduce Pig Lameness
US - Understanding and solving lameness in pigs, especially in sows, could save producers $23 million a year.


Anna Johnson, an Iowa State University animal scientist, will be leading a research project to understand lameness in pigs and provide solutions to producers. The four-year project is being funded with a $700,000 grant from US Department of Agriculture-Agriculture Food Research Initiative (USDA-AFRI).

Currently, there are no science-based solutions to help producers solve lameness problems in pigs. Dr Johnson said the goal of the project is to find tools to measure pain mitigation, lameness and make recommendations to manage the problem.

She explained: "Lameness is the second highest reason that sows leave the breeding herd early. Problems during reproduction are rated as the number one problem, but we think that lameness may be contributing to the reproduction problems."

Currently, there are no approved drug treatments for pigs with lameness pain. Producing science-based answers will help managers with housing, management and treatment lameness pain in breeding herds.

Dr Johnson continued: "We want to be proactive. As a research group, we see this as an upcoming issue and we want to provide science that can be used to address lameness pain."

The project collaborators include Ken Stalder, Iowa State animal science professor, Suzanne Millman and Locke Karriker, who are both associate professors of veterinary diagnostic and production animal medicine at Iowa State; and Hans Coetzee, an associate professor of clinical pharmacology at Kansas State University.

Researchers will use technically advanced tools within the Swine Intensive Studies Laboratory. The tools measure the pressure and weight animals place on each hoof and how the animal's gait affects weight distribution.

The state-of-the-art research facility is a joint collaboration between the College of Veterinary Medicine and the animal science department in the College of Agriculture and Life Sciences at Iowa State University. A web site providing additional details on the laboratory can be found by clicking here.

World Agricultural Supply and Demand Estimates – August 2011
Meat and poultry supplies are expected to remain stable while corn, wheat and oilseed supplies this month are forecast to be down, according to the August World Agricultural Supply and Demand Estimates.

Livestock, Poultry and Dairy
Small changes are made to the 2011 forecast of total red meat and poultry production. Beef production is reduced slightly. Although fed cattle slaughter is raised to reflect the large number of cattle placed in feedlots during the second quarter due to drought in the Southern Plains, second-half carcass weights have been reduced. The pork production forecast is lowered due to the expected short-term effect of recent hot, humid weather on third-quarter hog weights. For the year, broiler production is unchanged from last month. Production in June was higher than expected which offsets a sharper expected decline in second-half production. Turkey production is raised as higher forecast turkey prices are expected to moderate the expected decline in second-half production. The egg production forecast is reduced slightly from last month.

For 2012, beef production is reduced due to slower carcass weight growth and slightly lower later year slaughter. Higher feed prices are expected to slow the pace of later year marketings as cattle are kept on forage longer. Pork production is lowered as tight feed supplies pressure hog weights. Broiler production is forecast lower as the stronger second-half production declines carry into the first part of 2012. Turkey production is expected to grow more slowly as higher feed prices partly offset higher turkey prices. Egg production is reduced from last month on higher feed prices.

Beef imports are forecast higher in 2011 as demand for processing meat remains relatively strong. Beef exports are raised for both 2011 and 2012. A favourable exchange rate is expected to support exports to a number of countries. Likewise, pork export forecasts are raised for both 2011 and 2012. A favourable exchange rate and relatively strong demand for pork in Asia are expected to boost exports. US pork imports are reduced slightly in both years. No change is made to broiler exports for either 2011 or 2012 but turkey exports in 2011 are expected to be slightly stronger.

Cattle prices are forecast slightly lower for the third quarter but subsequent forecasts are unchanged. Hog prices are forecast higher for both 2011 and 2012 as stronger export demand in both years support prices. Broiler prices are lowered in both 2011 and in the first part of 2012 as supplies remain relatively large.

The milk production forecast for 2011 is reduced. Although the July Cattle report indicated that producers are holding relatively large numbers of dairy replacement heifers which supports a higher forecast dairy herd, recent hot, humid weather and relatively high priced feed may constrain the growth in milk per cow. Milk production is forecast higher for 2012, reflecting a larger herd in the first part of 2012 but slightly slower growth in milk per cow. Commercial exports for 2011 are forecast higher on the strength of butterfat exports. Imports are lowered reflecting lower imports of cheese and milk proteins. Trade forecasts for 2012 are unchanged.

Cheese, butter, and whey prices are forecast higher for 2011, but non-fat dry milk (NDM) is forecast lower. Tighter milk supplies are expected to support higher product prices but softening international prices will likely weigh on US NDM markets. The Class III price is raised, based on higher forecast cheese and whey prices, but lower forecast NDM prices will outweigh higher butter prices and the Class IV price forecast is reduced. For 2012, NDM prices are forecast lower on expected weaker early-year demand but cheese prices are forecast slightly higher. Forecast butter and whey prices are unchanged from last month. The Class III price is raised reflecting higher forecast cheese prices but lower NDM prices result in a reduced forecast for the Class IV price. The all milk price forecast is raised to $20.30 to $20.50 per cwt for 2011 and $17.80 to $18.80 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered 30 million bushels this month as higher forecast winter wheat production is more than offset by lower area and production for durum and other spring wheat. Total use for 2011/12 is lowered 30 million bushels with a reduced outlook for exports more than offsetting an increase in expected feed and residual use. Exports are projected down 50 million bushels with increased competition, particularly from FSU-12 countries, where production prospects are raised. Projected feed and residual use is raised 20 million bushels, reflecting a continuation of competitive prices for feed-quality wheat and lower projected corn supplies. Ending stocks are nearly unchanged. The 2011/12 season-average farm price for all wheat is projected at $7.00 to $8.20 per bushel, up from last month’s range of $6.60 to $8.00 per bushel supported by higher projected prices for corn.

Small changes are made to 2009/10 and 2010/11 supplies and usage reflecting the latest revisions to trade estimates from the US Bureau of Census. These revisions result in adjustments to feed and residual use in both years.

Global wheat supplies for 2011/12 are projected 11.4 million tons higher with higher beginning stocks and a sharp increase in production. World wheat production for 2011/12 is raised 9.7 million tons with increases in FSU-12, India, China and EU-27 more than offsetting a reduction for Argentina. Russia production for 2011/12 is raised 3.0 million tons on harvest reports for winter wheat and continued favourable weather in most of the country’s spring wheat areas. Ukraine production is increased 3.0 million tons on higher-than-expected yields; however, heavy rains during harvest have reduced this year’s crop quality. Kazakhstan production is increased 1.0 million tons on abundant spring and early summer rainfall. India wheat production is up 1.9 million tons based on the latest official government estimates. China production is raised 1.5 million tons based on the latest official government indications. Production is increased 1.4 million tons for EU-27 with increases for France, Romania and Bulgaria. Harvest results from France indicate yields were hurt less by prolonged spring dryness than early reports had suggested. Partly offsetting is a 1.5-million-ton reduction in expected production for Argentina as the latest planting progress reports suggest less acreage increase this year.

The 2011/12 outlook for world wheat trade and consumption this month is shaped by growing supplies of wheat, especially in FSU-12 and EU-27, and tighter supplies of corn in the United States. Imports are raised 3.0 million tons with increases for South Korea, Algeria, Indonesia, Syria and Kenya. World wheat feeding is increased 4.9 million tons with higher expected feeding in EU-27, China, Canada, South Korea and the United States. Exports are raised 4.0 million tons for Russia and 1.5 million tons for Ukraine, more than offsetting reductions of 1.5 million tons for Argentina, 1.4 million tons for the United States and 1.0 million tons for Canada. World wheat ending stocks for 2011/12 are projected 6.7 million tons higher at 188.9 million tons. Stocks are expected to decline slightly from 2010/11 with higher usage but remain 62.9 million tons above their recent low in 2007/08.

Coarse Grains
US feed grain supplies for 2011/12 are projected lower this month with sharp drops in forecast corn and sorghum production. Corn production for 2011/12 is forecast 556 million bushels lower with a reduction in harvested area and lower expected yields. The national average yield is forecast at 153.0 bushels per acre, down 5.7 bushels from last month’s projection as unusually high temperatures and below average precipitation during July across much of the Corn Belt sharply reduced yield prospects.

Total projected corn use for 2011/12 is reduced 340 million bushels. Feed and residual use is projected 150 million bushels lower reflecting the smaller crop and higher expected prices. Corn use for ethanol is projected 50 million bushels lower with tighter supplies and lower forecast gasoline consumption for 2011 and 2012. Projected corn exports for 2011/12 are reduced 150 million bushels with wheat feeding expected to increase. Ending stocks are projected 156 million bushels lower at 714 million. The stocks-to-use ratio is projected at 5.4 per cent, compared with last month’s projection of 6.4 per cent. The season-average farm price is projected at $6.20 to $7.20 per bushel, up 70 cents on each end of the range.

Other significant 2011/12 feed grain changes include a sharp reduction in the forecast sorghum yield and production with prolonged drought and excessive heat in the central and southern Plains. Sorghum exports are projected 20 million bushels lower. Domestic use is also projected lower with a 10-million bushel reduction in food, seed and industrial use and a 25-million bushel reduction in feed and residual use.

Small changes are made to 2009/10 feed grain supplies and usage reflecting the latest revisions to trade estimates from the US Bureau of Census and revisions for 2010 calendar year ethanol production from the Energy Information Administration. Estimated feed and residual use for 2009/10 is adjusted based on these revisions.

Global coarse grain supplies for 2011/12 are projected lower with a 3.6-million ton increase in beginning stocks more than offset by a 14.0-million ton reduction in output. The decline in global production is driven by reduced corn and sorghum production in the United States with foreign corn, barley and oats production all expected higher. Corn production is raised for Brazil, Ukraine and EU-27 but lowered for Egypt. Barley production is raised for Ukraine and Argentina but lowered for EU-27. World oats production is raised slightly with an increase for EU-27. World rye production is reduced with a smaller expected crop for EU-27.

Global coarse grain exports for 2011/12 are lowered slightly as reduced US corn and sorghum exports are mostly offset by higher expected foreign corn and barley shipments. Corn exports are increased 1.0 million tons for Ukraine, 0.5 million tons for Argentina and 0.5 million tons for Canada making up more than half of the reduction in US exports. Barley exports are increased 0.7 million tons for Ukraine, 0.5 million tons for EU-27 and 0.4 million tons for Argentina with the bulk of those increases to Saudi Arabia.

Global coarse grain consumption is projected down 8.4 million tons with most of this resulting from lower world corn feed and residual use. More than half of the reduction is from lower corn and sorghum feed and residual use in the United States. Corn feeding in lowered for EU-27, Canada and South Korea as rising supplies of competitively priced feed quality wheat displace corn usage. World corn ending stocks are projected down 1.1 million tons with increases for Brazil and EU-27 mostly offsetting the US reduction.

Oilseeds
US oilseed production for 2011/12 is projected at 91.7 million tons, down 4.7 million from last month. Soybean, canola and sunflower seed production are all projected lower. Soybean supplies for 2011/12 are reduced as lower forecast production is only partly offset by higher beginning stocks. Soybean production for 2011/12 is projected at 3.056 billion bushels, down 169 million due to lower harvested area and yields. Harvested area is projected at 73.8 million acres, down 0.5 million (using rounded data) mainly reflecting reductions for South Dakota. The first survey-based yield forecast of 41.4 bushels per acre is 2.0 bushels below last month's trend yield projection and 2.1 bushels below last year's yield. Soybean ending stocks are projected at 155 million bushels, down 20 million from July as reduced supplies are only partly offset by reduced exports and crush. Soybean exports are reduced 95 million bushels to 1.4 billion mainly due to the lower crop and increased projected supplies in South America this fall. Soybean crush is reduced 20 million bushels on lower domestic soybean meal use.

US changes for 2010/11 include reduced soybean crush and exports and increased ending stocks. Crush is reduced five million bushels to 1.645 billion reflecting reduced soybean meal exports. Soybean exports are reduced 25 million bushels to 1.495 billion reflecting lower-than-expected shipments in recent weeks. Soybean ending stocks are projected at 230 million bushels, up 30 million from last month.

Soybean and product prices for 2011/12 are all higher this month. The US season-average soybean price is projected at $12.50 to $14.50 per bushel, up 50 cents on both ends of the range. Soybean meal prices are projected at $355 to $385 per short ton, up $10.00 on both ends of the range. Soybean oil prices are projected at 54.5 to 58.5 cents per pound, up 0.5 cents on both ends of the range.

Global oilseed production for 2011/12 is projected at 451.4 million tons, down 4.1 million tons from last month mostly due to a reduction in the US soybean crop. Reductions for soybeans, rapeseed and cottonseed are only partly offset by increased sunflower seed and peanut production. Lower soybean production is projected for the United States, China and Ukraine. China’s production is projected at 14 million tons, down 0.3 million due to reduced harvested area. Brazil's soybean production is projected at 73.5 million tons, up one million tons due to higher expected yield. Production for Brazil’s 2010/11 crop is also raised this month to a record 75.5 million tons based on record yields. Rapeseed production is reduced for Ukraine and Belarus, reflecting lower yield prospects for both countries. Other changes include higher sunflower seed production for EU-27, higher rapeseed production for Australia, higher peanut production for China and lower cottonseed production for Brazil.

Rice
US total rice supplies for 2011/12 are projected at 257.2 million cwt, up 0.6 million from last month. Increases in both forecast beginning stocks and production more than offset a reduction in imports. USDA's first survey-based forecast of the 2011/12 US rice crop is 188.1 million cwt, up 1.1 million from last month's projection but down 23 per cent from the record 2010/11 crop. Average yield is forecast at 7,114 pounds per acre, up 55 pounds per acre from last month’s projection, and up six per cent from last year. Area harvested, at 2.64 million acres, is reduced slightly from a month ago. Long-grain production is forecast at 124.2 million cwt, up 0.7 million from last month, while combined medium- and short-grain production is forecast at 63.9 million, up 0.4 million from a month ago. The all rice import projection is lowered 1.0 million cwt to 18.0 million due in part to an expected slower pace of long-grain imports from South Asia.

US total rice use for 2011/12 is projected at 224.0 million cwt, down 3.0 million cwt from last month. Although all rice domestic and residual use is unchanged from last month at 127.0 million cwt, the long-grain projection is lowered 2.0 million to 94.0 million and the combined medium- and short-grain forecast is raised the same amount to 33.0 million. The export projection is lowered 3.0 million cwt from a month ago to 97.0 million based entirely on a decrease in combined medium- and short-grain exports. An increase in competition from both Australia and Egypt is expected in medium-grain markets in North Africa, the Middle East and Oceania. The long-grain export projection is unchanged from a month ago at 66.0 million cwt, and the combined medium- and short-grain estimate is lowered to 31 million. US all-rice ending stocks for 2011/12 are projected at 33.2 million cwt, up 3.6 million from last month, but down 35 per cent from the previous year.

The 2011/12 long-grain US season-average farm price is projected at $12.70 to $13.70 per cwt, up 70 cents per cwt on each end of the range. The combined medium- and short-grain price is projected at $14.50 to $15.50 per cwt, down $1.50 per cwt on each end of the range. The 2011/12 all rice price is projected at $13.20 to $14.20 per cwt, unchanged from a month ago. Higher prices are expected in Thailand due to a government intervention programme, which will provide support to global long-grain prices. Larger exportable supplies of medium-grain rice in both Australia and Egypt are expected to pressure global medium-grain rice prices.

Lower projected global 2011/12 total use more than offsets a slight increase in total supplies resulting in an expected increase in ending stocks. The increase in beginning stocks of nearly 0.7 million tons is primarily due to increases for India and Indonesia, which is partially offset by a reduction for Pakistan. Global production is lowered slightly due primarily to forecast reductions for Indonesia as well as North and South Korea, which is partially offset by an increase for Egypt and the United States. On the use side, global consumption is lowered 1.1 million tons, leading to an increase in projected global ending stocks. Domestic consumption is lowered for Pakistan and North Korea. Global exports are up from a month ago due to increases for Brazil, Egypt, India and Pakistan that are partially offset by reductions for Thailand and the United States. Global imports are up for Indonesia and China. Global ending stocks for 2011/12 are projected at 97.9 million tons, up 1.7 million from last month, largely the result of an upward revision for Thailand.


August 2011

Thursday, August 11, 2011
New Website for Meriden Philippines
PHILIPPINES - Meriden Philippines has recently launched a new website, www.meriden-phils.com.

The website is the result of feedback from customers who required more information about the unique products that are marketed in the Philippines.

Corazon P. Occidental, Managing Director of Meriden Phils Inc, says: "We are delighted to be able to respond to our customers suggestions and provide them with a valuable source of information on the products we carry."

"We now welcome our customers’ views on the new website so we can carry on improving our service to them."

You can visit the new website here: www.meriden-phils.com

Or visit the Meriden Animal Health website: www.meriden-ah.com

Wednesday, August 10, 2011
Strong Pork Export Demand Drives Up Live Hog Prices
US & CANADA - The Saskatchewan Ministry of Agriculture credits strong export demand for pork for a substantial increase in North American live hogs prices over past couple of weeks, 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. 
The Saskatchewan Ministry of Agriculture's weekly hog market update, released Monday, 8 August, shows significant improvement in live hog prices.

Livestock economist Brad Marceniuk reports strong export demand has helped push North America live hog prices to record levels.

Brad Marceniuk-Saskatchewan Ministry of Agriculture
Hog prices in Canada and the United States are up quite noticeably here over the last two weeks.

Both US and Canadian hog slaughter numbers over the last two months, they've been relatively close to year ago levels.

They've had a bit of a small increase however in the last two week or two we've seen some reductions in slaughter numbers.

This was likely due to the recent heat wave slowing animal growth and weight gains but overall the recent slaughter decline was positive for hog prices.

Both US pork cutout values and live hog prices have reached new record highs.

The Iowa/Minnesota daily average price reached US$106.30 per hundredweight while in western Canada the Maple Leaf Signature-3 price reached 190.31 per hundred kilograms.

The primary driving factor for the record North American hog prices and record pork cutout values has really been the strong pork exports with particularly strong demand coming from China and South Korea.

Mr Marceniuk points out feed wheat and barley prices in western Canada have trended upward since the beginning of the year and, while Canadian feed prices lag behind US corn prices, feed costs are at the upper long term range for hog producers.

He notes the slide in the value of the Canadian dollar has also helped improve returns for Canadian hog producers.

He says, with North American hog slaughter numbers and pork production close to year ago levels and not expected to change significantly over the next few months, hog prices will continue to be strongly influenced by pork export demand and, with uncertainty around the North American feed crop and potential for tightening supplies, producers will need to keep an eye on feed prices as we move into fall and winter.

Wednesday, August 10, 2011
Pork Commentary: A Week in Russia
RUSSIA - "We spent this last week in Russia," writes Jim Long in this week's Pork Commentary.


Jim Long is President &
CEO of Genesus Genetics.
Here are our observations:

Our visit was in the Southern Russia region of Kuban. Kuban is approximately 700 miles south of Moscow. The climate is much like Kansas – Nebraska warm with lower humidity. The area sits between the Black and Caspian Sea.


Kuban region is an extensive agriculture region with corn, wheat, barley, sugar beets, sunflowers, and livestock.


Last year much of Russia suffered from a drought. The Russian government put a total embargo on shipping of grain from the country. Consequently the world grain price became stronger due to a lack of Russian grain on the world markets. About a month ago Russia began allowing grain exports.


If you take no other message from this commentary be conscious of this: The Russia grain harvest where we were in the South is excellent. There has been timely rain and in the middle of summer a reflection of this is green grass everywhere.


We understand that Russia wheat is available currently at Black Sea Ports about $30.00 a tonne cheaper than anywhere else in the world.


The harvest of wheat has been done and storage is full. We saw many piles of wheat with no place to store waiting for export. Yields were strong 6 -8 tonnes per hectare. (80 – 100 bushels on average). Feed wheat locally is about $5.00 per bushel, barley $4.00 per bushel.


Corn and sunflower harvest will begin in a month and yields are expected to be strong.


In sugar beets the combination of expected yield and planting acreage (hectares) are expected to overwhelm processing capacity; a reflection of the good growing weather.


The bottom line is in the last 12 months the world Grain and Oilseed market price was enhanced by a lack of Russian exports. Now their back and it matters on prices going forward. Russia’s livestock numbers are not that large, there is no ethanol production, and the only outlet for the surplus grain – exports.
Nothing Better
Russian hog producers are in a wonderful place. Market hogs with good genetics are bringing about $325 US dollars per head or around $1.40 US a pound live weight. In a meeting with one producer we said you must be making $150 US per head, he corrected us it is $190. Imagine that wouldn’t fill an equity hole and to think some 12 pound pigs in the US are $10 each.

Now there are still many poor producers in Russia. One we met said his hogs take 300 days to reach 220 pounds (100kg), 14 pigs per sow per year. 35mm (1 ½ inch) back fat. They also receive about a $40 per head discount for poor quality. We calculated the difference in production cost and market price received was a minimum $100 per head less. The joke is they still were making $50 per head. It’s a fool’s paradise though as this will not last forever. They are dead men walking unless they upgrade their technology.


Russia is the largest exporter of oil and natural gas in the world. Approximately half of the Russian government’s revenue comes from oil and natural gas, or about $3 billion US per week.


The Russian government is looking at expanding swine production with financial support for the estimated $7 billion US dollars that is currently being planned to being invested in the Russian swine industry over the next five years which is 1 per cent of the expected Russian government petroleum revenue in the same years.
Our trip included Kubansky Bacon one of Genesus Nucleus Multiplication in Russia. Currently the genetic nucleus is being populated with registered purebreds, the fist 2500 sow multiplier will be ready to receive breeding stock in 10 weeks, and the second 2400 sow multiplier has begun construction. When completed, Genesus will have the largest supply of high health genetics in Russia. We have to admit it is a big undertaking and one never dreamed of as a child growing up on a 10 acre farm on a gravel road. I am travelling with my 14 year old son, he is having an opportunity to see, learn, and be exposed to a world I couldn’t ever imagine when I was his age.

Summary
Hog prices in Russia are strong and profitable. It’s a reflection of lack of supply. Russia will be importing pork for the foreseeable future. This will help US – Canada hog price to stay strong by supplying Russia pork. As the Russian economy grows we expect Russian pork consumption to increase. Russia has grain with an estimated 40 million acres of farmland not yet in surplus. Large tracks of land for bio security – Government money for expansion. Time will tell but it is a pretty exciting place for swine production right now. As we write we are on a plane flying from Moscow to Beijing. We will be in China all of this week. We will report our observations.


Author: Jim Long, President & CEO, Genesus Genetics 

Wednesday, August 10, 2011
Weekly Roberts Market Report
US - Monday was a "sell-everything" kind of day as US equity markets declined and crude oil took a 6.4 per cent dive to $81.31/barrel after Standard & Poor's cut the US' top-tier credit rating from AAA to AA+. Commodities were pressured by ideas that a global economic slowdown will limit demand, writes Michael Roberts.

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

In other news, the 2011-12 corn and soybean marketing year begins on 9/1/11. Corn and soybean consumption are slowing as the 2010-11 year wind down.

Many think USDA’s next World Agriculture Supply Demand Estimate (WASDE) report due out 8/11/11 will show larger-than-expected ending stocks.

Estimates from 12 analysts for ending stocks for 2010-11 for corn averaged 0.923 bi bu for corn vs. USDA’s 0.88 bi bu and 0.223 bi bu for soybeans vs.

USDA’s 0.200 bi bu. Ending stock average estimates from 20 sources for 2011/12 were: Corn – 0.741 bi bu vs. USDA 0.870; Soybeans 0.172 bi bu vs. USDA 0.175 bi bu; and Wheat – 0.671 bi bu. vs. USDA 0.67 bi bu.

Conclusions:
For 2010-11 the market is bearish corn and soybeans
For 2011-12 the market is bullish corn and neutral for soybeans and wheat.
LEAN HOGS on the CME finished down on Monday. AUG’11LH futures closed at $104.925/cwt; even with last Friday’s close but $1.825/cwt over last report.

The DEC’11LH contract closed at $87.100/cwt; down $1.650/cwt and $2.150/cwt lower than this time last week. MAY’12LH futures closed at $96.400/cwt; off $0.300/cwt but $0.30/cwt over last report.

The August contract found support from a record high USDA pork carcass composite value, a measure of wholesale prices. USDA on Monday put the pork cutout at $110.19/cwt, up $1.32/cwt from Friday; $5.55/cwt higher than last week and $11.25/cwt higher than two weeks ago!

It should be noted this is this was the eighth straight day for a record pork cutout. However, floor sources say sentiment in the pits is that recent strength in fresh pork prices may be near an end as supplies of live animals grow this fall when cooler temperatures make for better hog-raising weather and producers gear up for bigger production schedules from meat packers.

According to HedgersEdge.com, the average packer margin was raised $2.70/hd from last week to a three positive $2.55/head based on the average buy of $77.71/cwt vs. the average breakeven of $78.69/cwt. The latest CME lean hog index was placed at $106.55; up $1.04 and $5.04 over last report.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. SEPT’11 futures closed at $6.752/bu; down 17.75 ¢ /bu and 6.0 ¢ /bu lower than last Monday.

The DEC’11 contract closed at $6.860/bu; off 17.0 ¢ /bu but 0.5 ¢ /bu higher than last report.

Grain futures fell for the fourth day on Monday as investors ran to less-risky positions in gold. Traders set aside all fundamental thinking for safer havens.

Corn exports were neutral with USDA putting corn-inspected-for-export at 31.748 mi bu vs. estimates for 30-35 mi bu. USDA late Monday placed the US corn crop in good-to-excellent condition at 60 per cent; two per cent lower than last week and nine per cent lower than this time last year.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The AUG’11 contract closed at $13.092/bu; off 22.25 ¢ /bu and 49.5 ¢ /bu lower than a week ago.

NOV’11 soybean futures closed 24.5 ¢ /bu lower at $13.114/bu and 50.75 ¢ /bu lower than a week ago.

Hot weather was supportive as it is seen as hurting yield potential. Exports were neutral-to-bearish with USDA confirming a large shipment of soybeans contracted for delivery to China this year was put off until late next year.

USDA put soybeans-inspected-for-export at 5.642 mi bu vs. estimates for five to 10 mi bu. USDA late Monday raised the US soybean crop rating in good-to-excellent condition one per cent from last week to 61 per cent.

Ample global stocks are expected to keep soybean supplies sufficient for 2011-12 as long as the US crop doesn’t get hammered with major weather damage.

WHEAT futures in Chicago (CBOT) closed down on Monday. SEPT’11 futures finished 22.5 ¢ /bu lower at $6.564/bu and 20.0 ¢ /bu lower than a week ago.

The DEC’11 contract closed at $6.946/bu; off 28.25 ¢ /bu and 26.0 ¢ /bu lower than this time last week.

JULY’12 wheat futures finished at $7.586/bu; down 26.0 ¢ /bu and 25.75 ¢ /bu lower than last report.

European wheat futures also fell sharply on concern about a weakening global economy, pushing investors to sell risky commodities. Exports were supportive with USDA putting wheat-inspected-for-export at 25.238 mi bu vs. expectations for 17-22 mi bu. Funds increased net bear positions by 4,379 contracts.

Wednesday, August 10, 2011
Mexico Manages Effects of Prolonged Drought
MEXICO - Rain during July and August, as well as government support, will be key to the livestock sector's output for the second half of 2011, according to the latest GAIN Report from the USDA Foreign Agricultural Service.
 

Prolonged drought in Mexico has boosted slaughter and live exports for 2011 as the livestock sector seeks to avoid additional animal losses. Reduced availability of feed, fodder and higher grain prices (domestic and international) continue to pressure the livestock sector; thus, precipitation during July and August, as well as government support, will be key factors driving the sector's output for the second half of 2011.

Current situation
From January to March 2011, Mexican cattle exports to the United States surged 23 per cent compared to the same period last year.

Different sources have confirmed with FAS that live cattle exports during this quarter were driven by higher prices paid by US feedlots compared to Mexican feedlots. Additionally, a prolonged drought resulted in more exports of younger animals (330-400lbs) from northern states because of the attractive prices. However, unofficial data in USDA-Agricultural Marketing Service’s (AMS) weekly Market News report ‘Mexico Cattle to US’. Imports suggests that the flow of cattle to the United States tapered during June and July.

Even though no official data has been released, FAS estimates that Mexican cattle slaughter was approximately 1.5 per cent higher during the first five months of 2011 when compared to the same period in 2010, based on information provided by contacts and normal population growth.

The current concerns of the livestock sector, especially producers located in the northern states of Mexico, are a combination of:

adverse effects of the February frost resulting in poor quality grasses at the beginning of the year,
higher international grain prices, and
a prolonged dry season damaging the remaining grasslands and grain crops.
The Mexican Government has publicly stated that rains are expected to resume later this year, though sufficient rains are expected and sowing for the upcoming grain crops is progressing at a good pace. Thus, there is no concern at this time about the future availability of domestic grain and pasture supplies.

Poultry and pork sectors
For the poultry sector, some private sources have expressed to FAS that broiler production will continue increasing. Thus, the consumption of grains – primarily sorghum – will maintain the current increasing trend. The poultry sector will principally obtain grains domestically but also from imports (despite high grain prices). In addition, some contacts have stated that the profit margin for broiler production continues to cover the increased costs of production attributable to grains. Moreover, producers use more price risk management tools for grain purchases.

On the other hand, the pork sector is facing consolidation due to the higher production costs as a result of higher grain prices. However, grain demand by large- and medium-sized producers seems to be covered mainly by domestic sorghum and wheat that is being diverted from the export channels and, when necessary, imported.

Consequently, the poultry and pork sectors are expected to continue increasing their demand for both domestic and international grains at any price.

Wednesday, August 10, 2011
EU Pig Prices: House Prices Made Again in Germany
EU - Currently, the individual EU member countries’ slaughter pig markets appear in varying ways. The quotations indeed remained on a constant level in a number of EU countries.
 

The slaughter pig supply is reported to be of quite some size but is nonetheless demanded swiftly by the slaughter companies in many countries.

In Denmark the quotation went into reverse, quoting minus 3 cents for this week, after an eight weeks’ period of constant prices. A 1 cent minus was reported from Great Britain, and the Swedish corrected price went down by 1.5 cents as a result of changes in the exchange rate. It is true that the price given by the producers’ association for livestock and meat went up by 2 cents in Germany. But the slaughter companies responded to that with significant resistance. On Friday afternoon already, Toennies and other major slaughter companies announced that they would not take part in this increase. Instead, they plan to pay a house price only of EUR 1.53 per kg this week. It needs to be noted that this week Westfleisch is not going to pay a house price, just as they did three weeks ago.

Trend for the German market: Although the slaughter companies pursue a policy of making house prices, the usual quantities on offer can be placed smoothly. It remains to be seen for the week ahead which one will prevail: the positive market assessment made by the producers or the massive blockage performed by the slaughter companies. From today’s point of view, everything seems possible. In any case it needs to be stated that the current price level is a ruinous one for both the piglet producers and the pig feeders.

Week D NL DK B F PL CZ IT ESP AUT GB SWE IR
Week 24 1.506 € 1.455 € 1.516 € 1.495 € 1.493 € 1.500 € 1.580 € 1.601 € 1.683 € 1.407 € 1.726 € 1.034 € 1.401 €
Week 25 1.506 € 1.455 € 1.515 € 1.482 € 1.485 € 1.528 € 1.568 € 1.639 € 1.683 € 1.407 € 1.700 € 1.026 € 1.401 €
Week 26 1.506 € 1.455 € 1.516 € 1.482 € 1.479 € 1.552 € 1.578 € 1.671 € 1.683 € 1.407 € 1.667 € 1.079 € 1.401 €
Week 27 1.506 € 1.465 € 1.516 € 1.482 € 1.478 € 1.519 € 1.564 € 1.671 € 1.683 € 1.407 € 1.637 € 1.085 € 1.401 €
Week 28 1.546 € 1.475 € 1.516 € 1.519 € 1.482 € 1.518 € 1.563 € 1.677 € 1.683 € 1.448 € 1.659 € 1.091 € 1.401 €
Week 29 1.546 € 1.455 € 1.516 € 1.507 € 1.493 € 1.503 € 1.611 € 1.690 € 1.683 € 1.448 € 1.666 € 1.075 € 1.401 €
Week 30 1.476 € 1.417 € 1.516 € 1.445 € 1.493 € 1.488 € - € 1.700 € 1.683 € 1.417 € 1.620 € 1.091 € 1.401 €
Week 31 1.476 € 1.408 € 1.517 € 1.445 € 1.499 €     1.706 € 1.683 € 1.417 € 1.605 € 1.092 € 1.401 €
Week 32 1.496 € 1.408 € 1.490 € 1.445 € 1.500 €     1.696 € 1.683 € 1.417 € 1.594 € 1.076 € 1.401 €

Wednesday, August 10, 2011
China's Pork Price Rises Hit Autumn Custom
CHINA - Monday, 8 August, marked the first day of autumn, according to the Chinese lunar calendar, a time when people traditionally try to boost their weight ahead of the coming winter.


Yet, the special dishes that people traditionally enjoy at this time of year have been taken off the menu in some homes because of the high price of pork.

"I wanted to cook many dishes for my family tonight, but pork is just too expensive," complained Yu Yan, 50, who runs a small restaurant in Chaoyang district.

"The cost of celebrating the tradition is too high now. I've had to reduce the amount of pork I buy."

Li Qiu, the first day of autumn according to the lunar calendar, which fell on 8 August this year, is the day when residents in North China start tieqiubiao, a custom dating back to the Jin Dynasty (1115-1234) that involves storing fat for the winter.

Usually this means eating more meat, especially zhouzi, or pork thigh, which is thought to help people replenish the energy and weight they lose in summer.

"The hot and humid weather saps residents of their energy and makes them weak, so the start of autumn is the right time to eat meat," said Chen Wenjun, a saleswoman at Chaoyang district's Daoxiangcun, a Chinese store established as early as 1895.

She said that even though meat prices are soaring customers are still flocking to her store for the traditional foods.

A 360-gram box of zhouzi specially made for Li Qiu is now 38 yuan ($6) at Daoxiangcun, a rise of 6 yuan compared with last year.

For some the rising prices are too much.

"I've given up buying zhouzi, as it's too expensive," said Zhang Xue, 30, a resident who has enjoyed eating meat from Daoxiangcun since she was a child.

Meanwhile, at Tianfuhao, another famous food store, the price of zhouzi has risen to 64 yuan for 500 grams.

"It's probably fair to say this is the highest price since the store was established," said a salesman who did not want to be identified. "Customers spent 54 yuan buying the same food last year, which means a year-on-year rise of 18.5 per cent."

China Daily talked to six customers buying meat in the two Beijing stores. All complained about the rapidly increasing price of pork and only one insisted on buying zhouzi.

"It's my habit when the lunar autumn starts," said Liu Yan, a 40-year-old accountant at a State-owned enterprise. "The taste of pork made by traditional brands is more delicious and convenient than home cooking."

However, the ancient tradition also faces a challenge from the decision by many young Chinese to opt for healthier diets.

Kou Fei, 24, an employee at an educational company, insisted she can get all the nutrition she needs from vegetables and fruits.

CME: Pork Prices Hit Record High
US - Pork wholesale prices have climbed sharply in recent days, with prices in the last five trading days hitting new all time record highs, write Steve Meyer and Len Steiner.


This has allowed packers to continue to bid up the price of hogs coming to market with hog carcass values now also record high levels.

On Tuesday, the hog cut-out closed at $106.23/cwt, $3.68/cwt or 3.6 per cent higher than the previous week and $15.3/cwt or 16.9 per cent higher than a year ago.

The IA/MN hog price on Tuesday was quoted at $103.98, $5.36 or 5.5 per cent higher than a year ago and $19.53 or 23.4 per cent higher than the comparable period a year ago.

Cash performance has buoyed futures, with the nearby lean hog contract gaining 70 points yesterday to close at life of contract highs.

So what is driving the current pork markets and what does this imply for pork expansion later this year and in 2012?

Pork sales to China clearly have dominated the discussion and they are seen as driving the recent surge in prices. We have no way of knowing the pace of sales and the weekly pork export report could not come soon enough.

Anecdotal evidence from industry contacts indicates that pork shipments to China remain very strong and could be sustained at least through the end of August.

After that, it is unclear what the flow of Chinese orders will look like. Much will depend on pork prices in China and the ability of Chinese producers to ramp up production.

One thing to keep in mind is that while China is the largest pork producer in the world and has a hog herd of almost half a billion animals (compared to the US at around 65 million), much of it is small-scale production. As a result, expansion there can take place much faster than in highly advanced and more concentrated pork industries, such as the US.

In other words, it is a lot easier for Chinese small producers to add a few pigs than it is for US operations that need to ponder the feasibility of making large scale investments.

Indeed, the hog cycle in the US 30 years ago, when there were a lot more small producers, used to by much more volatile than it is today.

Another factor driving pork prices, in our opinion, is what has happened with hog carcass weights.

Back in July we noted that one should keep an eye on hog weights given the spike in temperatures across the Midwest. In the past, the primary data source for assessing hog weights was the USDA weekly production report, which provided estimates of hog weights and production for the week.

We continue to quote this report in our weekly summary as it is still considered the official pork supply datasheet.

According to that report, hog weights for the week ending 29 July were 202 pounds per carcass, compared to 200 pounds a year ago.

However, these numbers do not jive with the daily actual hog weights reported by packers as part of the Mandatory Price Reporting system.

The chart below shows the daily weighted average hog carcass weights. These weights do not capture all hogs slaughtered but they do account for a large portion of them.

The daily report on 1 August showed that the weighted average carcass weight of the 346,810 hogs slaughtered was 198.04 pounds, compared to 200.54 pounds a year ago.

Another sign of the sharp decline in hog weights is the tight supply of fat pork trimmings in the marketplace. USDA quoted 42CL pork trim at an all time record high of 87 cents per pound, just one penny shy of the price end users paid for lean 72 CL pork trim. Fat pork trim is currently trading at a 10-cent premium to 50CL beef.

Still think hog weights are up vs. 2010?

Outdoor Bred Pig Meat Upgrades Sausages
UK - Snowbird Foods is re-launching its top selling Gourmet range of sausages exclusively using outdoor-bred, single-source pig meat to guarantee high quality, absolute consistency and total traceability.




Managing director Philip Paul watches the first run of Snowbird's new Traditional Lincolnshire Gourmet Sausage as it goes through the production process.It is the first time such a scheme has been undertaken in the UK by a manufacturer of fully cooked and frozen sausages and the London-based company, part of the VION Food Group, has teamed up with leading pig farmers to deliver a major improvement to the quality of its award winning products.

A specific breed of pig raised on Red Tractor Farm Assured holdings has been selected for this unique operation because it delivers high meat yield, improved quality, total traceability, absolute consistency - and just the right amount of fat to enable Snowbird to make the perfect sausage.

The company has also upgraded its specification to require a significantly greater quantity of shoulder meat in the recipe.

"As sector leader in the market for fully cooked and frozen sausages, we are really excited by this move to embrace the whole food chain, with pig farmers more deeply involved in the whole process of making higher quality sausages and customers welcoming the move," said Snowbird managing director, Philip Paul.

"We have worked for years to deliver the quality of products our customers want so it was a natural extension of this work to involve suppliers and they are excited to have the opportunity to be involved as our quality partners," he added.

Welcoming this move, BPEX Foodservice trade sector manager, Tony Goodger, said: "more and more foodservice businesses are looking to buy pork and pork products that come from assured pigs. By purchasing assured pork products caterers can be confident that the meat used has come from pigs that have been sourced from independently audited farms that meet high animal welfare conditions and offer the reassurance of full traceability."

To celebrate the launch, Snowbird has developed a Traditional Lincolnshire recipe as the new flagship product for its award-winning Gourmet range of sausages which is available exclusively to caterers and ready meal manufacturers. Cumberland, Pork, Pork & Leek, Olde English Pork, Pork & Mustard, Pork and Ale and other recipes are also available.

With a meat content in excess of 75 per cent, the Traditional Lincolnshire Gourmet Sausages have an exciting blend of herbs and spices which include sage, parsley and ground white pepper and are in natural casings.

Fully cooked to a golden brown and frozen at the factory stage, they are ready to heat (or simply defrost) from frozen and meet all Food Standards Authority 2012 requirements for low fat and low salt. Snowbird Gourmet sausages are available in weights from 12.5g to upwards of 150g. The standard link is 60g.

Thursday, August 04, 2011
Pork Commentary: Cash Market Hogs Surge Higher
US - Last week, the US National lean hog price pushed to over $1.04 per pound (53–54 per cent lean), writes Jim Long in this week's Pork Commentary.


Jim Long is President &
CEO of Genesus Genetics.
This is a welcome respite to an industry challenged by unprecedented high feed costs. This cash prices is $20 per head higher than August lean hog futures were indicating on 20 June. That $20 is the difference from breaking even as a producer and making money.

I have to say, we get some real satisfaction with not only the benefit from the higher prices but from knowing last August when 2011 lean hog futures were 80 cents a pound, we projected $1.00, says Mr Long. We were out there and we took some arrows for our opinion. The Chicken Little economists were projecting 80 cents lean at the same time we were at $1.00. They just didn't know what was going on in the rest of the world. Armchair academics with no skin in the game and have never left North America do not get global dynamics. After all, 92 per cent of all pigs in the world are not in the US. When the US exports 25 per cent of its pork production and Canada 50 per cent, market conditions in the rest of the world really matter.

We expect the pull of global pork demand will continue for months to come. China is approximately US$1.33 per pound live weight, Russia is $1.56 per pound live weight, South Korea is $1.95 per pound live weight, Japan is $3.25 per pound live weight, and Mexico is 85 cents per pound live weight. It doesn't take a rocket scientist or an economist to realise these countries as large importers of pork have price points way beyond the North American domestic price. There is little wonder pork importers in each of the above countries can and will pull pork to their markets.

It is August again and we see no reason why US lean hog prices next year will not be in the $1.00 plus range next summer, says Mr Long.

He sees little sign of breeding herd expansion, indeed US sow slaughter in June was 268,000 up 21,000 from June last year. For the first six months of this year, US sow slaughter is 1.468 million, up 6,000 from last year. He expects the increase of 21,000 in June would indicate a liquidation level.

If sow prices are any indication, the sausage-makers are getting all they need. On average, 500–550 pound sows are 63.99 cents per pound, the same time last year, they were 67.65 cents per pound; this despite market hogs at $1.03 while at the same time last year they were $82.00.

It has been hot but market hogs keep getting pushed to market. It appears hog weights are still coming down with average US lean hogs last Thursday 198.49 down two pounds from Thursday the week before.

Mr Long expects that some of the sow herd liquidation in June we saw is related to the freefall prices in small pig prices. Last week's cash early wean price averaged $15.58 and 40-pound feeder pigs, $36.99. There are lots of stories of small pig-buyers running away from their contracts. It seems to be a never-ending story. When small pig prices are high, finishers want to buy pigs on a contract usually lower than cash. Then when cash drops below the contract price, too many buyers cannot or will not live up to the deal. The $20 per head loss on the cash small pig prices is too much for many to handle after the cash and equity crater of the last four years.

On the global feed prices, the huge drop of $2.00 a bushel for wheat since the end of May ($8.75-$6.72) could keep upward pressure on the corn price limited. Russia, after a year of no exports, is now on the market again and offering wheat about 75 cents a bushel cheaper than the rest of the world. (That's how you get business back). Wheat can and will flow into swine rations to replace corn. Just last week, the CEO of Cargill blamed much of the jump in world grain prices on Government policy and interference which included Russia Grain Embargo. The US corn ethanol policy is also Government interference but it is expected that the US debt ceiling issues will in all likelihood not play out well for the corn ethanol lobby.

Pfizer's Improvac for chemical castration of pigs was approved last week in Canada. Mr Long is not saying anyone will use it. If Michael McCain, CEO of Maple Leaf, says "no" as Canada's leading personality in the packing industry, it will be dead on arrival, he says. Mr Long says he expects Maple Leaf will not want to risk a consumer and export market backlash from using chemical castration as a risk of damaging their brand.

Road trip
As Mr Long wrote above, you can't get a feel for the global pork markets sitting in a university or corporate cubicle, with no skin in the game. The next 19 days, he is on a road trip to Russia, China, Thailand and India. He will report on what is happening on the ground in the grain and swine markets.


Author: Jim Long, President & CEO, Genesus Genetics

Friday, August 05, 2011
Brazilian Hog Market – July 2011
BRAZIL - Try as one may, it is difficult to get away from the roller coaster concept of the Brazilian pig market, writes Martin Riordan, Sales and Service at Genesus Brazil.
 

Each time a new Brazilian Market Report has been prepared this year, prices have taken another wild swing. But at least this time, it is in the right direction!

A rapid rise in pig prices since the beginning of July, which has been seen to a greater or lesser extent across the country, indicates that a sudden shortage has developed. In part this shortage is due to producers cutting back on sow numbers over recent months as a reaction to heavy losses.

In São Paulo state, which is a thermometer of national supply and demand due to the large number of producers and smaller industries creating a competitive environment, prices have risen from about 2.10 real (BRR; US$1.34) per kg live weight near the end of June to the present price of BRR3.09 (US$1.97), a massive increase of 47 per cent. With such a big jump, São Paulo attracts pigs from other states, causing local shortages which force prices to rise.

A report from Mato Grosso state for 22 July mentions a price increase from a low of US$1.09 per kg live weight in May to this week's price of US$1.50, some 38 per cent more. Production costs are estimated at US$1.34, so producers are back in profit.

What has brought about this sudden turnaround in the market? As usual, nobody seems to be too sure and there are few reliable statistics on which to base an argument. However, some factors have certainly played a part:

Many producers have reacted to the general crisis in the industry, which began with the financial crisis in October of 2008, by cutting back or stopping production. Thus the number of independent market pigs has certainly declined. In our region, which had hundreds of producers a couple of decades ago, it has now become difficult to buy a pig to roast for a barbecue as there are so few producers.


The price of beef has risen firmly, getting back towards the high end-of-year prices. As beef is the meat of preference for the Brazilian barbecue, pork consumption rises to keep the cost within budget. So this will have the effect of increasing domestic demand.


A famous national dish called feijoada uses several ingredients from the pig, including ribs, tails, ears, trotters, bacon and pieces of pork, all stewed slowly with black beans. And feijoada is a very popular dish when temperatures fall, particularly in the populous states of São Paulo and Rio de Janeiro. The month of June had several cold spells, with heavy frost in the South and temperatures below 10°C in the Southeast. Feijoada is not solely responsible for increased domestic demand: in general, pork consumption traditionally rises in Brazil as temperatures fall.


The volume of pork exports in June bucked the monthly trend this year and, at 52,752 tonnes, was 12.35 per cent higher than that of June 2010. The increase in total value was 29.65 per cent. The accumulated export volume from January to May was down four per cent year-on-year. This reversal was greeted with surprise, as during June Russia announced that it was banning exports from more than 80 meat plants in Brazil, including many of the main pork-exporting plants. The reason given was the usual one, that the plants were not observing Russian health standards. However, it is generally taken that the reasons for the ban were more commercial than technical.
Also, the price of corn has dropped back slightly, around 10 per cent on a national average, reducing production costs. So, with higher prices for market hogs and lower production costs, for the first time in several months, many producers are now breaking even or making a small profit, a situation which has brought relief to those who have survived the recent crisis. The price of corn has normal regional variations in Brazil, due to differences in production and consumption. Current prices range from about US$7.55 per bushel in the southern region to US$4.58 in Mato Grosso in central Brazil. High transport costs and interstate taxes manage to maintain this difference.

Surviving producers are feeling relief but will be considering their future in the activity carefully. Recent years have seen long periods of crisis and short periods of relief, with a tendency to quickly reduce equity. After two years of study, the government monopoly body has finally approved the fusion of two of the biggest Brazilian pork industries, Perdigão and Sadia, with conditions attached. If the companies fulfill these conditions, they will trade as BR Foods, which will be a major player on the global food market. The trend towards consolidation and concentration among hog industries is bad news for independent producers who have less and less sales options, particularly in the South. This leads to price volatility and, in really bad moments, a total lack of hog buyers in some regions. This is the producer's worst nightmare, and thus many are reconsidering their future: cut back or abandon production, or seek a contractual arrangement with one of the industries to produce grower piglets.

Genesus Global Market Report
Prices for week of 25 July 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 99.68¢
US$/lb carcass 73.76¢
Canada (Ontario) 1.78
C$/kg carcass 64.90¢
Mexico (DF) 21.98
MXP/kg liveweight 84.39¢
Brazil (south region) 2.54
BRR/kg liveweight 73.50¢
Russia 95
RUB/kg liveweight $1.55
China 19.03
RMB/kg liveweight $1.33
Spain 1.27
€/kg liveweight 82.12¢