Tuesday, June 28, 2011
Pork Commentary: US Hogs and Pigs Report
US - In this week's Pork Commentary, Jim Long writes about the latest Hogs and Pigs report released by the USDA on 24 June.

Jim Long is President &
CEO of Genesus Genetics.
US lean hogs reached over $1.00 lean last week. Some individual net lots exceeded $1.10 lean per pound. No matter how you figure it the average market hog is bringing over $200 per head. These are record prices. Since the World Pork Expo market hogs have jumped 15 cents a pound and corn has dropped over $1.00 a bushel. The cash price margin swing over $30.00 per head. This is an improvement we all need!

We wrote last week that we believe early weans and feeder pigs had hit the seasonal price floor. This week they were steady to $2.00 per head higher. Feeder pig brokers also told us this past week they believe the seasonal cash price floor had been hit.


July corn June 10 reached $7.99 a bushel; last week it closed at $6.70 a bushel. This is still too high but $1.30 lower in 2 weeks. The difference is $10 per head in cost of production. This has done wonders for psychology. When corn was $7.99 the idea was for it to go to $10.00, a terrible crisis for the swine industry. The $1.30 a bushel drop to $6.70 clearly shows that there is a down not just up to the corn market. It just needs to keep going down.


We believe that the cash hog market is going to remain strong in the $1.00 plus range over the coming weeks. Pork exports sales should be extra strong. China, Korea, Japan, Russia, Viet Nam, etc… all have cash hogs over $1.50 lean per pound. At that price it means supply is low and demand is high enough to sustain their market prices. There will be pull of North American pork to these markets.
We often hear the fable that US consumers will have price resistance with pork over $1.00 lean. Maybe it’s true but consider this: 2 per cent of the Chinese make over $15,000 US per year. Lean hog prices are over $1.50 lean a pound in China. It is not hard to figure US vs. China which consumer has more buying power. The US consumer also doesn’t want to buy $4.00 a gallon gasoline – but they do. It’s part of lifestyle just like eating meat is.

June Quarterly Hogs and Pigs Report

(Thousands)
  2010 2011 2011 as % of 2010
Kept for Breeding 5788 5760 100
Market 57808 58021 100
Sows Farrowing (March – May) 2929 2877 98
Pig Crop (March – May) 28730 28851 100
Pigs per Litter (March – May) 9.81 10.03 102

Treading water = record high hog prices would normally cause expansion, but real high feed prices and a hog to corn ratio of 12:1 has kept the breeding herd and pig numbers about the same. The good news is the market inventory is not expanding while global demand for pork is growing. Keep in mind a year ago 53 – 54 per cent lean hogs were 81.85 lean a pound. We are 20 higher currently or $40 per head. This is despite the same number of hogs going to market. Demand for the world’s most popular meat is being proven in this 25 per cent higher price year over year.

The productivity factor can be seen clearly in the report. Pigs per litter are up .22 year over year to 10.03 – a new record. We expect productivity to increase, at Genesus we see a genetic trend line of 25 per litter of pigs born per year improvement. Genesus now has customers weaning 13 pigs per litter consistently; 3 pigs better than the 10 per litter last quarter on the Pig Report. Productivity will continue to increase, with the most successful producers utilizing the best available technology.

Ontario Pork Congress
Last week we attended the annual Ontario Pork Congress in Stratford Ontario. Our observations:

Ontario is unique in that there are only two producers with over 10,000 sows in the sow population of approximately 330,000.


Most producers in Ontario are family farmers who work in the barns, grow their own feed, and put the manure back on the land. This is real integration. A model in these times of high hogs and high feed that works real well.


The psychology of producers at the Ontario Pork Congress was significantly more positive than the World Pork Expo. It is probably mostly due to the $30.00 plus gain in hog process and lower feed prices in the two week time period.


The Ontario industry we believe is treading water. Some finishers are being built but little sow herd expansion.


Ontario benefits from excess packer capacity and demand for hogs is strong.


The Ontario Pork Congress was well organized and well attended. The producers that came got full value for their participation.


Looking at the producers in the industry not only in Ontario but also the ones we met in the World Pork Expo and everywhere it is amazing the resiliency and determination there is in our business. The survivor’s are now benefiting from $1.00 hogs, it is needed.

Author: Jim Long, President & CEO, Genesus Genetics 

Wednesday, June 29, 2011
Weekly Roberts Market Report
US - Wholesale beef and pork prices have weakened amid slowing demand. Processors look to have most of their needs already filled for the upcoming holiday.

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

LEAN HOGS on the CME closed down on Monday. The JULY’11LH contract closed at $94.150/cwt; down $1.850/cwt and $3.40/cwt lower than a week ago. AUG’11LH futures closed at $92.350/cwt; down $2.850/cwt and $4.325/cwt lower than last report. Profit taking and a weaker global economy pressured prices. Wholesale beef and pork prices have weakened amid slowing demand. Processors look to have most of their needs already filled for the upcoming holiday. USDA on Friday raised hogs on US farms as of June 1 0.6 per cent vs. expectations for a 0.2 per cent increase. USDA put the pork cutout at $99.06/cwt; down $0.21/cwt but $3.29/cwt higher than last report. According to HedgersEdge.com, the average packer margin was lowered $3.50/head to a negative $8.25/head based on the average buy of $74.50/cwt vs. the average breakeven of $71.43/cwt. The latest CME lean hog index was placed at $100.98; up $1.82 and $7.30 higher than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’11 contract closed at $6.606/bu; off 9.25 ¢/bu and 39.75 ¢/bu lower than a week ago. The DEC’11 contract closed at $6.266/bu; down 5.25 ¢/bu and 33.75 ¢/bu lower than this time last week. Long liquidation on global economic worries such as the second Greek debt crisis, Chinese inflation, and slow US growth weighed on futures. Funds took money out of grain and livestock commodities cutting net bull positions in CBOT corn by 22 per cent from last week. Fundamental demand from the livestock and ethanol sectors remains strong while expensive US corn limits exports. US livestock producers are buying less expensive wheat to feed. USDA put corn-inspected-for-export at 28.9 mi bu vs. expectations for 30-35 mi bu. Analysts expect US corn stocks as of June 1 to be 3.302 bu, the smallest on record since 2004. Looks like prices most likely have topped amid continued downward pressure. Expect corn markets to remain extremely sensitive to acreage reports and weather reports.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed higher on Monday. The JULY’11 contract closed at $13.296/bu; up 9.5 ¢/bu but 6.0 ¢ /bu lower than last report. NOV’11 soybean futures closed 5.75 ¢/bu higher at $13.150/bu but 20.5 ¢/bu lower than last report. Soybean futures went up despite negative outside market influences on old-crop export sales to China. Short covering, buying on chart signals, and strong exports were supportive. USDA put soybeans-inspected-for-export at 8.732 mi bu vs. expectations for 6-8 mi bu. China was a major buyer of US soybeans. Soy prices in Rosario, Argentina ended up on stronger local demand. Soybean prices will most likely be tested by the next USDA report.

WHEAT futures in Chicago (CBOT) closed down on Monday. JULY’11 futures finished 13.0 /bu lower at $6.226/bu and 36.75 ¢/bu lower than last report. The DEC’12 contract closed at $6.956/bu; off 9.75 ¢/bu and 49.75 ¢/bu lower than this time a week ago. Global economic weakness is limiting demand and encouraging long liquidation by large funds. Additionally, European wheat prices were sharply lower on concerns about economic woes. They are withdrawing liquidity from the market. US wheat stocks are expected to be down as much as 15 per cent in the next USDA report. USDA put wheat-inspected-for-export at 20.61 mi bu vs. estimates for 20-23 mi bu. Funds increased net bear position in CBOT wheat. As expected, wheat prices have continued to weaken.

Wednesday, June 29, 2011
Pork Prices Continue to Rise; Producers' Shares Slide
CHINA - In China nowadays, it appears to be pigs rather than bulls that touch the nerves of the markets.


Pork prices kept their bull run in the week ended June 26 with an increase of 4.5 per cent week-on-week, according to the Ministry of Commerce (MOC) on Tuesday.

Pork prices soared 40.4 per cent year-on-year and helped drive up the inflation rate to a 34-month high in May.

Since early May pork prices in China have continued rising mainly due to the cyclical live-pig supply shortage and higher costs for pig feed caused by rising grain prices.

Pork is the most widely consumed and affordable meat in China, and its price weighs heavily on the consumer price index (CPI).

The MOC data showed that during the week ended 26 June, meat prices rose from the previous week with pork up 4.5 per cent, beef up 0.9 per cent, chicken up 0.6 per cent and mutton up 0.4 per cent.

Heavy rains and floods in the south pushed up the average wholesale prices of 18 staple vegetables by 2.3 per cent as a whole, with the wholesale price of cabbage and Chinese cabbage up 20.3 per cent and 17.9 per cent from previous week.

Slide in pork producer's shares
China Yurun Food Group Ltd dropped in Hong Kong trading, extending the company stock's record 20 per cent plunge on Monday.

That came as short selling surged amid speculation that the research firm Muddy Waters LLC will issue a negative report on the pork producer.

Zhu Yicai, Yurun chairman, attributed the slump on Monday to "hedge funds and market rumors" and wasn't aware that any organization plans to issue a report on Yurun, according to Titus Wu, an analyst at the research firm DBS Vickers Hong Kong Ltd., who was on a 30-minute conference call with the company.

The briefing wasn't open to journalists and Yurun hasn't returned at least five calls and e-mailed requests for comment.

"We take pains to keep our research activities confidential, and a widespread market rumor would either represent a significant failure on our part or is false," Carson Block, a Muddy Waters founder, said in an e-mail.

Yurun fell as much as 8.7 per cent, declining for a fourth day in a row, after short-selling affected 21.8 million of its shares on Monday, four times as many as were affected on June 21, according to Bloomberg data.

"The concerns are still based on rumors - a lot has not even been verified," Renee Tai, a Hong Kong-based analyst for Samsung Securities Co, who recommends buying Yurun's stock, said in a phone interview on Wednesday.

"From the fundamental point of view, everything's chugging along nicely. We're not seeing any sort of surprises. Even the margin pressures are within expectations."

Mr Zhu, Yurun chairman, said he plans to buy back shares in the company, which is based in Nanjing, Jiangsu province, according to Tai, Nicholas Wang, an analyst with Daiwa Institute of Research Ltd, and notes to clients from Wu at DBS Vickers and CCB International Securities Ltd.

Mr Wu downgraded Yurun to "hold" from "buy" in a note to clients on Tuesday, citing bad publicity.

"We maintain our forecast of 35 per cent core earnings growth this year, excluding government grants and negative goodwill," Mr Wu said. Still, he said "the chairman was still unable to clarify and explain questions about the breakdown of government grants and the size of the pig farming belonging to Yurun Group".

Yurun said it has worked with reputable international firms since going public, and that Goldman Sachs Group Inc sponsored its 2005 initial offering and KPMG audited its accounts, analysts who attended the call on Monday, including those from DBS Vickers, CCB, Kim Eng Securities Ltd and Citigroup Inc, said in notes to clients.

Yurun's gross profit margin underwent a "slight decrease" in the first five months of the year, according to a filing to Hong Kong's stock exchange on Monday.

The company's sales meanwhile rose "significantly" in the period up to 31 May compared with 2010 largely because of higher hog prices and a greater slaughtering volume, it said.

The price of marbled pork in China rose as much as 4.3 per cent to 28.20 yuan ($4.35) a kilogram in the 10 days from 11 to 20 June compared with the previous 10 days, the National Bureau of Statistics said on Friday. Prices for pork thigh rose 4.1 per cent to 29.05 yuan a kilogram.

Monday, June 27, 2011
Cash Hog Prices Surge to Record Highs
US - Today’s USDA Hogs and Pigs report said the nation’s 1 June swine breeding herd inventory was 100.3 per cent of a year ago, writes Ron Plain.
 
Ron Plain
The market hog inventory was 100.6 per cent on 1 June 2010. The average of pre-release trade forecasts was that both the sow herd and the market hog inventory were up 0.1 per cent compared to last June. The USDA survey number is not significantly higher than the trade forecasts, so do not expect much market reaction.

Cash hog prices surged to record highs this week. Carcass prices hit a dollar per pound for the first time ever. The national average negotiated carcass price for direct delivered hogs on the morning report today was $100.77/cwt, up $8.54 from last Friday. The Friday morning price report for the eastern corn belt was $100.42/cwt. Nether Iowa-Minnesota nor the western corn belt had enough early hog sales for a market report. Friday’s top live hog price at Peoria was $66. Zumbrota’s top was $68/cwt. The top for interior Missouri hogs was $69.75/cwt, $5.25 higher than the previous Friday.

The pork cutout value rose for the third week in a row. USDA’s Thursday afternoon calculated pork cutout value was $99.27/cwt, up $6.46 from the previous Thursday. Loins, hams, bellies and butts were all higher. Packer margins continue to be tight. This morning’s national average hog carcass price equaled 101.5 per cent of the pork cutout value.

Hog slaughter totaled 1.936 million head this week, down 1.9 per cent from last week and down 0.6 per cent compared to the same week last year. Barrow and gilt carcass weights for the week ending 11 June averaged 202 pounds, down 1 pound from a week earlier, but 1 pound heavier than a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 268.3 pounds, down 0.3 pounds from the week before and down 2.3 pounds compared to the same week last year.

The July lean hog futures contract ended the week at $96.00/cwt, up 35 cents from the previous Friday. The August contract settled Friday at $95.20/cwt, also up 35 cents for the week. October hogs settled at $88.67.

The July corn futures contract lost 30 cents this week to settle at $6.70 per bushel on Friday. December corn closed at $6.32.

Monday, June 27, 2011
Premier's Visit Boosts Poultry & Pork Exports
UK - Britain and China are expected to announce business deals worth UK£1 billion (US$1.60 billion) today, including increased exports of British poultry and pork to China.


Chinese sources say that the deals include the reopening of British poultry exports to China and increased UK pork exports.

The deals will be announced following talks in London today, 27 June, between British Prime Minister David Cameron and Chinese Premier Wen Jiabao, who is in the middle of a European tour taking in Hungary, Britain and Germany.

Deals worth more than UK£1 billion are set to be announced after the talks between Mr Cameron and Mr Wen.

It gave no details but a government source said agreements could be reached in the energy, retail and design sectors.

The two sides are expected to announce the reopening of the Chinese market for British poultry exports, potentially worth £10 million a year, British officials said. China banned poultry products from Britain following an outbreak of bird flu at a farm in eastern England in 2007.

Britain and China will also announce an expansion of trade in pork products, following agreements last November to export British breeding pigs and British pig meat to China.

A further deal to supply 800 breeding pigs will be signed. Five more British farms will be approved to export pig meat to China in a deal worth more than £25 million pounds, Britain said.

Premier Wen's visit is the latest of several recent high-level diplomatic exchanges between Britain and China, including a visit to China by Mr Cameron last November.

Britain wants to double trade with China by 2015 to some US$100 billion, in line with the British government's strategy of expanding business with fast-growing emerging markets to help offset subdued domestic demand at a time of sharp spending cuts.

Monday, June 27, 2011
European Pig Herd in Decline?
EU - During difficult periods within the European pig industry, many producers generally react by curtailing production levels by depopulating herds, reducing sow numbers or by exiting the industry, writes David Owens, Meat Division, Bord Bia - Irish Food Board.


This generally results in a decline in pig supplies and a lift in pig prices as per the ‘pig price cycle’. During the last feed crisis, in 2007/2008 production declined across Europe with reductions of over 20 per cent in many Eastern European countries. The more developed pig industries in EU-15 nations, due to the structure of the industry and the level of investment, react more slowly to difficult market periods.


Following only a few months of increased feed costs, last December’s European pig herd census reported a decline in EU sow numbers of two per cent compared to the previous year. Most nations within the EU reported declines in sow numbers, with greater falls evident again in Eastern Europe. The UK survey was in contrast to the rest of Europe with an increase of two per cent in sow numbers.

However, since these census figures were collected, on-farm issues have become much deeper and sow disposals have increased. A more recent April census return from Denmark, reported that sow numbers were down by six per cent with replacement gilts falling by 14 per cent. Sow disposals for Denmark and the UK have increased strongly this year, by eight per cent and 16 per cent, respectively.

For more detailed information on the EU pig herd census, please click here.

Pig supplies in the EU
An anticipated decline in pig production across the EU has been slow to emerge. The EU Commission forecast meeting from last April has indicated that production for the first half of 2011 will be around two per cent ahead of last year, aided by an increase in sow disposals. Looking ahead to the second half of the year they suggested stable output in quarter three with the decline expected to commence in the final quarter. For the year as a whole, production across the EU is forecast to increase by 0.9 per cent.

Thursday, June 16, 2011
Significant Drop in Wheat and Oilseed Yields Forecast
UK - Wheat and oilseed rape yield is likely to be significantly down on the five year average, according to NFU members in a survey run between May and early June this year.

National analysis of the survey was weighted to include crops grown in areas where less crop damage had been reported.

With very poor growing conditions, particularly in the east, results suggest that average English wheat yield in 2011 will be down by 14 per cent to around 6.5 tonnes per hectare (ha), which would rank among the lowest since the late 80s.

Area planted is currently thought to be similar to last year but wheat production in England for 2011 may be much lower due to some severe drought pressure on crops this spring. Based on analysis of these farmer estimates, production could be down on the five year average by around two million tonnes to below 12 million tonnes (mt) or 15 per cent below the five year average of 13.738mt.

Winter oilseed rape appears to be in a slightly stronger position than for cereals, with farmers forecasting English yields at 3.1t/ha, nine per cent down on the five year average of 3.4t/ha. Plantings are believed to be significantly up on the five year average, at 655k/ha in 2011, indicating a potential total production of 2.028mt against the five year average of 1.762mt in England.

NFU combinable crops chairman Ian Backhouse said: “I believe this year’s forecast yield decrease was largely due to poor growing conditions since winter. With the east of England experiencing its lowest rainfall for the first half of the year in over 100 years, farmers are clearly concerned about the impact on the ground of this abnormally dry spring.

“I’d like to thank NFU members for completing this survey. Watching crops wither has meant a difficult time for many of our farmers and growers, particularly in the worst affected parts of the country.”

Responses have pointed to large variability in potential yields, often linked to almost complete lack of rainfall as well as soil type and capacity to hold water. Indications from respondents were that other cereal crop yields will be similarly affected, particularly for spring sown crops such as spring barley and spring wheat.

Friday, June 24, 2011
Got Low-Quality Wheat? Use It as Animal Feed
US — As some farmers face the probability of low-quality wheat this growing season — in some cases below quality standards for milling — they may need to look for alternative markets for their crop.
 

One option is to use it as animal feed, but several factors need to be considered before incorporating this wheat into livestock diets.

Stephen Boyles, an Ohio State University Extension beef specialist, said that as a general rule mold-free wheat can be used to substitute up to 50 per cent of the grain portion of finishing diets for cattle.

“While some experienced feeders have used larger amounts of wheat, I tend to recommend lower levels to people not familiar with feeding wheat,” Boyles explained. “When feeding lower-quality wheat, limit wheat to 40 per cent of dry matter or 50 per cent of corn in the diet, whichever is highest. Also, you should take longer to build up to full feed than you would with corn, and carefully monitor consumption. I would not recommend using wheat in high-grain diets on self-feeders or in creep rations. Salt (7-12 per cent) might be used as an intake inhibitor for cattle on grass using a self-feeder.”

Wheat Processing Is Important
The way wheat is processed is also important. Boyles said that although the kernel must be cracked or broken, over-processing will result in the production of many fine particles that are undesirable, since the rate of wheat starch digestion in the rumen is very rapid. An excessive amount of fine particles will cause generally low and erratic intakes, digestive upsets, and poor performance.

“Rolling rather than grinding generally results in fewer fine particles,” Boyles said. “If wheat is dry-rolled, it should be rolled or ground as coarsely as possible while still breaking all the kernels. Steam-flaking wheat can improve animal performance. Mixing grains should occur after grain processing rather than before. Mix wheat with silage, haylage or corn grain to reduce the risk of animals eating too much at one time.”

Feeding Wheat to Cattle
There are a few problems associated with feeding wheat to cattle, Boyles warned. For example, when feeding high-concentrate rations, it is not advisable to change back and forth from wheat to other feed grains.

Additionally, since wheat is a fast-fermenting grain in the rumen, problems of depressed feed intake, acidosis and abscessed livers have been reported. That’s why it’s crucial to limit the amount of wheat in the ration, mix it with other grains, and feed animals at least 15 per cent roughage – making sure rations contain approximately 6-10 per cent fiber.

“Buffering agents are added to overcome the problems of reduced feed intake when high-wheat rations are fed to cattle,” Boyles said. “Adding 3.5 ounces of sodium bicarbonate (baking soda) per head daily gives a slight improvement in performance of steers on wheat rations. A finely ground feed-grade limestone can also serve as a buffer. Adding an additional 1-1.3 per cent of finely ground feed-grade limestone to wheat rations may give a slight improvement to performance of cattle. However, avoid increasing the calcium levels of the ration above 0.9 percent.”

Be Careful of Mycotoxin Poisoning
What about sprouted wheat or grain infected by head scab or vomitoxin? Boyles said sprouting does not appear to affect the nutritional value of wheat, but those feeding this grain to cattle must be aware that mold and fungal infestations are more likely with sprouted wheat — and feeding moldy wheat to livestock must be avoided to prevent mycotoxin poisoning.

Meanwhile, the occurrence of scab in wheat does not automatically mean vomitoxin is present, but high levels of scabby kernels in harvested grain should raise red flags. If molds or toxins are suspected, the best thing to do is to have the wheat tested.

Friday, June 24, 2011
NDRC: Inflation Under Control Despite Concern
CHINA - Inflation in June may exceed last month's 34-month high but will be under control in the second half of the year, the nation's top planning agency said, despite concern over rising pork prices and a drop in grain production following drought and flooding.


--------------------------------------------------------------------------------
*
"If the pork supply does not increase, the situation may even become worse" 
Yuan Mingsong, deputy director at the department of market supervision with the Ministry of Commerce
--------------------------------------------------------------------------------
 

The National Development and Reform Commission (NDRC) said on Wednesday that the consumer price index (CPI), a major gauge for inflation, could reach a new high in June, after it hit 5.5 per cent in May.

However, in the second half of the year the CPI is likely to taper off from its peak, the NDRC said in a statement released on its website.

The government set an inflation target of 4 per cent for this year. But after the CPI rose, on average, by 5.2 per cent in the first five months, there were concerns over whether the target could be met and if the world's second-largest economy could avoid a hard landing.

According to the NDRC, the high inflation rate in 2011 was mainly due to the rapid increase in consumer prices in the second half of 2010.

The CPI figure might rise to 6 per cent in June, mainly pushed up by soaring pork prices, Ba Shusong, a senior economist at the State Council Development Research Center, which advises the government, said.

Sun Chi, an economist at Nomura Securities, said that retail pork prices are likely to rise sharply this month, and it is possible that the CPI might exceed 6 per cent year-on-year in June.

In the second week of June, average pork prices in 34 major cities increased 80 per cent year-on-year to 17.62 yuan ($2.73) per kilogram. The price surge pushed up food prices in general, which account for about 30 per cent of the CPI basket, the NDRC said.

Pork prices are likely to rise throughout the year, Yuan Mingsong, deputy director at the department of market supervision with the Ministry of Commerce, told China Daily.

If the pork supply does not increase, the situation may even become worse, he said.

Relatively lower pork prices at the beginning of this year led many farms to reduce the number of pigs being raised, which decreased supply. An increase in the price of animal feed also put upward pressure on pork prices, according to Zhu Wenzhao, director of the Shanghai Agricultural Products Central Wholesale Market Management Co Ltd, which provides 30 per cent of wholesale pork in Shanghai.

The drought earlier this year and the ongoing floods in southern China may also affect agricultural production, the NDRC said.

Because of bad weather, wheat production in Shandong province is predicted to decrease by 30 per cent this year, Zhao Kang, a government official from the Shandong Administration of Grain, said.

Shandong is a key wheat producer and accounts for more than 30 per cent of the national crop.

The government has introduced a number of measures to combat inflation.

The People's Bank of China, the central bank, raised the reserve requirement ratio for commercial banks, the amount they have to set aside, by 50 basis points on 14 June. The hike was the sixth this year.

Although the economy slowed down slightly recently, economists said there is no evidence of a possible hard landing.

"We expect price pressures will ease later in the year, but in the very near term headline measures of inflation are above Beijing's comfort level, with risks skewed to the upside," Brian Jackson, a senior economist with the Royal Bank of Canada, said.

A report from UBS Securities also said that the latest economic figures don't support a hard landing.

"We don't think there are enough valid economic reasons to suspend interest rate hikes at this juncture, and therefore, continue to expect a rate hike of 25 basis points in June, and another one in July or August," the report said.

Reconstruction in Japan after the earthquake and tsunami is expected to increase the country's imports from China, which will contribute to the growth of China's GDP, said Jing Ulrich, JP Morgan's managing director and chairman of global markets for China.

Friday, June 24, 2011
CME: Highlights of Latest Cold Storage Report
US - USDA’s monthly Cold Storage report, released Wednesday, 22 June, shows significantly larger stocks of frozen meat and poultry in US cold storage facilities relative to one year ago and modest increases in inventories versus one month ago, write Steve Meyer and Len Steiner.


There were 2.228 billion pounds of meat/poultry in freezers as of 31 May, 11.6 per cent more than last year and 4.9 per cent more than at the end of April.

The data for all meat/poultry species appear in the table on page 2 (please see link below). The chart below depicts monthly inventories of the four major meat/poultry species since 2000.


Some highlights of the report are:

Beef, pork and chicken inventories increased relative to one year ago with beef leading the increases at +25.5 per cent. 90 per cent of that increase was accounted for by higher boneless beef stocks. That latter relationship almost always has to be true since boneless beef almost always accounts for 85-90 per cent of beef in cold storage.


Frozen pork inventories were 22.2 per cent higher versus one year ago. One factor driving that increase is the emergence of Korea as a major export market in the wake of their foot and mouth disease outbreak. Stocks of frozen pork butts, a key Korean export item, were 99.5 per cent higher this year versus one year ago.


Chicken inventories increased 9.8 per cent versus one year ago. The increase was led in percentage terms by wings (+72.2 per cent) and in tonnage terms by breast/breast meat at +41.13 million pounds. It is little surprise that those two cuts have been major drags on chicken values this year. On the other hand, stocks of leg quarters, thigh/thigh quarters and thigh meat were all below one year ago, facts that again support the relative strength of leg quarter prices so far in 2011.


Turkey inventories were, quite understandably, larger than one month ago (+21.8 per cent) as the sector builds stocks for its seasonal trade this fall but were 3.9 per cent lower than one year ago. The discipline of the turkey sector has been very remarkable over the past three years as they manage supply-demand relationships well and keep prices high enough to cover costs and still make money.


Month-month inventory changes were positive for each species except pork but the increases in both chicken and beef stocks were relatively small at 2.5 and 2.4 per cent, respectively. Pork inventories fell by 0.8 per cent during May and the decline would have been much more dramatic had it not been for a 31.8 per cent increase in ham inventories. Those ham stocks of 101.5 million pounds were 9.2 per cent larger than last year as well. We attribute this month-month increase primarily to the unusual decline of ham inventories in April which, in most years, is the month in which ham stocks begin to increase toward their September peak. A major driver of that April draw-down was this year’s very late date for Easter. Bottom line: The increase of ham inventories in March doesn’t worry us.
We expect frozen meat and poultry stocks to begin declining this month and for that decline to be larger in July and August. The seasonal decline in hog slaughter as well as what is developing as a major drop in average hog weights will reduce pork supplies and increase the drawdown of pork stocks. We are hearing widespread anecdotal evidence that South Korea is back in the market for US pork —not to the degree they were in April but much more aggressively than in May. In addition, recent reductions in broiler egg sets and chick placements will show up as lower broiler slaughter and, we think, production in July and beyond, perhaps reducing production enough that some of the large stocks of breasts/breast meat and wings can be depleted. Those declines will obviously be offset to some degree by the normal increase of turkey stocks. But that increase is quite normal and fully expected.

The past two days have seen record-high cash hog prices. The Iowa-Minnesota weighted average negotiated base price broke $100/cwt carcass for the first time ever on Tuesday and then went even higher yesterday reaching $101.65. The top of the range paid for pigs in Iowa-Minnesota was a whopping $106.00 yesterday. The Western Cornbelt (of which Iowa-Minnesota is a subset) weighted average negotiated base price also eclipsed $100, reaching $101.49 yesterday. The national weighted average price, which also includes prices in the Eastern Cornbelt, fell just short of the $100 mark at $99.93.

Friday, June 24, 2011
UK Slaughter Statistics - June 2011
UK - The latest National Statistics produced by Defra on UK slaughterings of cattle, sheep and pigs were released on 23 June 2011 according to the arrangements approved by the UK Statistics Authority.
 

Key points
Cattle: UK prime cattle slaughterings were 4 per cent higher than in May 2010 at 170 thousand head. Beef and veal production was 74 thousand tonnes, 7 per cent higher than in May 2010.
Pigs: UK clean pig slaughterings were 3 per cent higher than in May 2010 at 718 thousand head. Pigmeat production was 59 thousand tonnes, a rise of 3 per cent on May 2010.
Section 1: UK monthly slaughter estimates
This table shows monthly estimates of the number of cattle, sheep and pigs slaughtered for meat for human consumption in the United Kingdom. The survey is run according to statistical, rather than calendar months, the number of weeks in the statistical month is specified below.

Table 1: UK monthly slaughter estimates
Thousand Head
United Kingdom March 2011
4 weeks April 2011
5 weeks May 2011
4 weeks
Steers 84 100 79
Heifers 65 76 61
Young Bulls 23 28 29
Cows and Adult Bulls 44 48 46
Calves 8 8 6
Clean Pigs 763 891 718
Sows and Boars * * *
* Data are confidential

Section 2: UK average dressed carcase weights
This table shows the monthly average dressed carcase weight of livestock slaughtered for meat for human consumption in the United Kingdom.

Table 2: UK average dressed carcase weights
Kilogramme
United Kingdom March 2010 April 2011 May 2011
Steers 369.2 367.3 368.0
Heifers 321.4 320.9 319.6
Young Bulls 339.3 340.1 344.3
Cows and Adult Bulls 320.4 321.6 321.1
Calves 38.5 42.5 42.4
Clean Pigs 79.0 77.5 77.6
Sows and Boars 145.5 151.1 154.4

Section 3: UK monthly home-killed production of meat
This table shows the monthly volumes of meat produced in the United Kingdom. Data is shown according to statistical, rather than calendar months, number of weeks in statistical month as specified.

Table 3: UK monthly home-killed production of meat
Thousand Tonnes
United Kingdom March 2011
4 weeks April 2011
5 weeks May 2011
4 weeks
Beef 74 86 74
Pigmeat 63 73 59

Section 4: UK average weekly slaughterings
This following table shows the average weekly slaughter figures for the last thirteen months. The monthly slaughter figures in section one are affected by the number of weeks in the statistical month. To get a clearer measure of trends weekly averages are calculated by dividing the number of livestock slaughtered each month by the number of weeks in the statistical month.

Longer term trends can be seen in the charts following this table.

Table 4. UK average weekly slaughterings
Thousand Head
United Kingdom 2010 2011
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Steers 19 18 18 18 21 22 21 18 20 20 21 20 20
Heifers 14 14 13 13 14 15 17 15 17 17 16 15 15
Young Bulls 7 8 8 8 7 6 6 5 6 6 6 6 7
Cows and Adult Bulls 9 9 10 10 11 13 16 11 14 12 11 10 11
Calves 1 1 1 1 2 2 2 1 1 2 2 2 1
Clean Pigs 174 171 171 181 184 190 197 179 181 192 191 178 179
Sows and Boars 4 4 4 4 * * * * * * * * *
* Data are confidential




United Kingdom average weekly slaughtering – Cattle



United Kingdom average weekly slaughtering - Pigs
Section 5: UK slaughterings by country
This table shows monthly estimates of the number of cattle, sheep and pigs slaughtered for meat in England and Wales, Scotland, Great Britain and Northern Ireland. Data are shown in statistical months, rather than calendar months. The totals for the countries may not add up to the Great Britain totals or the United Kingdom totals in section one, due to rounding.

Section 5. UK slaughterings by country
(Thousand Head)
  March 2011
4 weeks April 2011
5 weeks May 2011
4 weeks
England & Wales
Steers 51 62 49
Heifers 38 46 37
Young Bulls 16 19 20
Cows and Adult Bulls 34 37 35
Calves 8 7 5
Clean Pigs 593 688 551
Sows and Boars * * *
Scotland
Steers 20 23 19
Heifers 16 18 14
Young Bulls 2 4 4
Cows and Adult Bulls 4 5 5
Calves 0 0 0
Clean Pigs 49 60 45
Sows and Boars 0 0 0
Great Britain
Steers 71 85 68
Heifers 54 64 51
Young Bulls 18 23 23
Cows and Adult Bulls 38 41 39
Calves 8 7 5
Clean Pigs 641 748 596
Sows and Boars * * *
Northern Ireland
Steers 13 15 11
Heifers 11 12 10
Young Bulls 5 5 6
Cows and Adult Bulls 6 7 7
Calves 0 0 0
Clean Pigs 122 143 122
Sows and Boars 1 0 0
*Data are confidential

Friday, June 24, 2011
Brazil's Pork Exports Rose Again in Value
BRAZIL - Pork export volume in April was marginally more than in the same month of the previous year but the value of those exports was 10 per cent higher in US dollar terms.


According to ABIPECS, Brazil exported 44,988 tons of pork in May 2011, which is 2.3 per cent less than the same month last year. The average price per ton in US dollars – $2,815 – was 9.8 per cent higher than one year ago. The value of March's sales was just over US$126.6 million, which is 7.3 per cent more than in May 2010.

For the year to date, the volume exported was 214,100 tons, 3.9 per cent below the equivalent figure for 2010. The value of those export is up 7.2 per cent at just over $583.1 million. The average price is $2,724 per ton, which is 11.5 per cent above that of one year ago.

Friday, June 24, 2011
Ukraine's Meat Production Forecast to Grow in 2011
UKRAINE - A reduction in the profitability of the production of all types of meat, which is expected this year due to a significant rise in the price of feed, will trigger a slowdown in the pace of production growth and a further redistribution of the market.


According to an annual survey conducted by the Ukrainian Agribusiness Club, entitled Doing Agribusiness in Ukraine 2011, the growth in meat production in 2011 will amount to 3-4 per cent, whereas a year earlier this figure was 7 per cent.

"According to our calculations, meat production in 2011 will amount to 1.93 million tons in carcass weight, and the share of poultry meat will rise to 56 per cent, while the share of beef will fall to 12 per cent of the total meat production. In the overall structure of the market, only the share of pork will remain unchanged - 32 per cent," Director of the AgriSurvey Agency, an analytical unit of the Ukrainian Agribusiness Club, Taras Hahahiuk, said.

Wednesday, June 22, 2011       Global Interest in Needle-Free Injection Fueled
CANADA - Officials with AcuShot report the successful adoption of needle-free injection within western Canada's pork industry is helping fuel global interest in the technology, 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. 
Needle-free injection uses high velocity and pressure to create an opening, seven to ten times smaller than that of a conventional needle, to instantaneously force the veterinary compound being administered through the skin.

Both Manitoba and Saskatchewan currently offer incentives to encourage the adoption of needle-free injection.

AcuShot regional marketing and technical support manager Mike Agar, who was on hand earlier this month at World Pork Expo in Des Moines to demonstrate the technology, reports that Canada is already seeing this and awareness is building.

Mike Agar-AcuShot
The key is getting people using the technology successfully and ground swell grows from that.

We're seeing, in Canada there's been a real buy-in by the processing side of things that's really advocating the use of the technology because they actually see that it is viable and it helps them in what they're marketing and what they may or may not have to actually detect at the processing plant relative to needle reside.

Canada is really leading the way in this and getting people using it and we're seeing people uptake the technology there.

Get a number of successful situations and the word spreads pretty quick.

From my experience coming out of Canada here and in particular in Manitoba the sheer volume of calls based on what people are hearing from how people are doing in Manitoba with our technology, people are interested in using the technology and we're just on the forefront of this.

Mr Agar says in the United States there are grave concerns over the spread of PRRS and, because the technology eliminates the potential for cross contamination, it's grabbed the interest of American producers as a way to reduce the transmission of that disease.

He notes a lot of sales are being made to South Korea right now because of the foot and mouth disease outbreak there.

Monday, June 20, 2011
Higher Commodity Prices Here to Stay
GLOBAL - The latest OECD-FAO Agricultural Outlook 2011-2020 predicts the impact of high prices on the poor in developing countries can be devastating.


Higher food prices and volatility in commodity markets are here to stay, according to a new report by the OECD and FAO.

The OECD-FAO Agricultural Outlook 2011-2020 says that a good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the Outlook states that over the coming decade real prices for cereals could average as much as 20 per cent higher and those for meats as much as 30 per cent higher, compared to 2001-10. These projections are well below the peak price levels experienced in 2007-08 and again this year.

Higher prices for commodities are being passed through the food chain, leading to rising consumer price inflation in most countries. This raises concerns for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition, the report says.

OECD Secretary-General, Angel Gurría, said: "While higher prices are generally good news for farmers, the impact on the poor in developing countries who spend a high proportion of their income on food can be devastating.

"That is why we are calling on governments to improve information and transparency of both physical and financial markets, encourage investments that increase productivity in developing countries, remove production and trade distorting policies and assist the vulnerable to better manage risk and uncertainty."

FAO Director-General, Jacques Diouf, commented: "In the current market context, price volatility could remain a feature of agricultural markets, and coherent policies are required to both reduce volatility and limit its negative impacts", noting that "the key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries, where 98 percent of the hungry people live today and where population is expected to increase by 47 per cent over the next decades."

Action should focus in particular on smallholders in low-income food-deficit countries, he added.

G20
The Outlook reinforces the core messages for mitigating and managing price volatility in a recent inter-agency report to the G20, 'Price Volatility in Food and Agriculture Markets: Policy Responses', coordinated by FAO and OECD on behalf of 10 international organisations.

The report suggests, among other things, that G20 countries take steps to boost agricultural productivity in developing countries, reduce or eliminate trade-disorting policies and establish a new mechanism to improve information and transparency on agricultural production, consumption, stocks and trade.

Fisheries
The Outlook, which covers fisheries for the first time, sees global agricultural production growing more slowly over the next decade than in the past 10 years. Farm output is expected to rise by 1.7 per cent annually, compared to the 2.6 per cent growth rate of the past decade. Despite this slower growth, production per-capita is still projected to rise by 0.7 per cent annually.

Per-capita food consumption will expand most rapidly in Eastern Europe, Asia and Latin America, where incomes are rising and populations growth is slowing. Meat, dairy products, vegetable oils and sugar should experience the highest demand increases, according to the report.

Global production in the fisheries sector is projected to increase by 1.3 percent annually to 2020. This is slower than growth over the previous decade, due to reduced or stagnant capture of wild fish stocks and lower growth rates in aquaculture, which underwent a rapid expansion over the 2001-2010 period.

By 2015, aquaculture is projected to surpass capture fisheries as the most important source of fish for human consumption, and by 2020 should represent about 45 per cent of total fishery production, including non-food uses.