Pork Commentary: Small Pig Prices Surge Higher
28 November 2012

Jim Long is President &
CEO of Genesus Genetics.

US - Sow herd liquidation is attributed to be driving prices higher as cash early weans have risen from averaging $8 in mid-September to $55 last week, writes Jim Long, CEO of Genesus Inc.

It’s phenomenal the rapid surge in small pig prices. Cash USDA early weans averaged $8 in mid-September while cash 40lb feeder pigs were $15. Both prices were terrible leading to losses of $30-$40 per head.

Last week USDA cash early weans averaged $55.71 and 40lb feeder pigs averaged $60.53. It doesn’t take an MBA to see the huge difference in cash flow this has brought to small pig producers.

Why the rapid price increase?
 
Sows are now being priced for May-June 2013 delivery. With Lean Hog futures May 99.100 and June 101.025 the small pig market reflects these higher prices.

 53-54 per cent US National Market Hog Prices last Friday closed at $77.05 – June Lean Hogs are 24 per cent higher than current cash hogs or $50 a market hog higher.
•We believe the liquidation of the sow herd is greater than most if not all analysts believe. This in itself is cutting small pig supply.

 As we suspect much of liquidation was in small pig producers, we have lots of finishing barns in North America looking for pigs to fill their pens. Finishing barns are a fixed cost. Farmers hate empty barns. The chase for small pigs to fill the barns is pushing prices higher. It’s simple; less supply and greater demand.
 

•We also believe the hottest summer on record has cut the number of pigs born. Smaller litters and fewer litters have cut small pig production.

We also believe that the hottest summer on record lead to increased sow mortality. This is another factor in fewer small pigs available. Less small pigs, fewer market hogs next summer = Record high market hog prices.
 

•We talked to a major feeder pig broker this past week; they said more buyers than pigs are available. They expect cash early weans will reach $70 and feeder pigs $90. Long way from $8 and $15.

Other observations
 •The latest US weekly sow slaughter was 64,188. Anything over 55,000-57,000 per week are liquidation levels in our opinion. We are in the swine breeding stock business. Sales are slow. We think its industry wide.

Producers have been trying to maintain cash. You do that by not putting gilts in. Many herds have shrunk in inventory by less gilt retention and attrition.

We expect USA-Canada sow herd will be 200-250 thousand smaller on January 1, 2013 compared to June 2012. We had hogs hit $1.00 last summer. There is a reason the sharpies in Chicago have Summer lean hogs over $1.00.
 

•On top of less pork in 2013, all indications are of less Beef and Poultry. Latest estimates of boneless equivalent US per capita consumption of Total Meat, Poultry and Seafood is 180.3 lbs. in 2013, down from 200 lbs. in 2008 and down almost 4 lbs. in 2012.

 Per capita consumption will be down mostly from total supply being lower. The lower supply will push prices higher for all consumable proteins.
 

•When we think of Corn markets, the conventional sentiment appears to be high prices for ever. There are many facts to prove high corn prices forever. We don’t have any clue when the corn market will collapse, but it will. No market stays at record highs forever.

 When it does collapse, the livestock sector will be blessed by record returns as hog profits could hit $50-100 per head. It will happen; not if, but when. The challenge is to stay in the game long enough until the chance of a generation hits us. The world will plant the crop.

If it rains = lots of corn. When that happens lower corn demand caused by record high corn prices cutting livestock and poultry production will lead to corn under $4 a bushel. Maybe we are crazy and delusional but it is what we believe.

 


Author: Jim Long, President & CEO, Genesus Genetics

CME: How Important is Russia to US Pork, Beef?
11 December 2012

 

US - “Have fun with that!” That was the response from a Brazilian friend a few years ago when we mentioned that Russia was a growth market for US pork exports, write Steve Meyer and Len Steiner.

And it was far more a warning than a wish of good fortune! Brazil’s livestock sectors in general and pork sector in particular said this based on a long history of dealing with Russian needs and whims and knew full well how difficult that process could be at times.
 
We were once again reminded of our Brazilian friend’s warning this week as Russia announced that it wanted all US beef and pork imported into Russia to be tested and certified free of ractopamine, a beta agonist feed additive used in the US and many other countries to improve animal performance in pigs and beef cattle. The US Meat Export Federation said that the requirement could halt shipments of US products to Russia by last Saturday, 8 December. A primary concern is simply meeting the paperwork requirement, especially for product that is already in transit. A Reuters report quoted USMEF estimates that there were 210 shipping containers of US pork and beef valued at around $20 million already on their way to Russia.
 
How important is the Russian market to the US beef and pork industries? The appropriate answer is “Not unimportant by any means. Small relative to some others but growing.” US beef companies had shipped 121.7 million pounds of carcass weight equivalent product to Russia through September. That figure is up 5.3 per cent versus last year and represents 6.6 per cent of total US beef exports. It is also roughly one-third of the amount of product shipped to Japan, our largest beef export customer, through September. Russian exports accounted 0.6 per cent of US beef output so far in 2012. September’s monthly beef exports to Russia (11.982 mil. lbs., carcass) represented 0.59 per cent of September output.
 
On the pork side, Russia has been one of the star markets thus far in 2012 with shipments there growing by 41.1 per cent, year-on-year, through September. US pork processors had shipped 213.7 million pounds of carcass weight equivalent pork to Russia, about one-fifth that amount that had moved to our largest pork customer, Japan, and one-quarter as much as has been shipped to Mexico. Russian exports of pork accounted for 1.4 per cent of total September pork production. Year-to-date through September, exports to Russia accounted for 1.3 per cent of pork output.
 
Does this mean that exports will stop if the Russians remain adamant? Not necessarily—especially for pork. US pork producers and processors have been producing non-ractopamine fed pigs for China for some time. Beef producers could do the same, we suppose, if the markets are large enough and pay well enough. We think the Russian situation poses a bigger challenge for US beef exporters simply because the “non-ractopamine” system doesn’t appear to be as well established.
 
One of the damaging aspects of these situations is their leveraging by US anti-meat and anti-modern agriculture groups. Do not be surprised to hear some “This product is banned even in Russia so we should ban it here, too” demands from the usual groups that would limit modern technology no matter how safe it has been proven to be. We’re guessing that this action by Russia is motivated far more by protectionism than by an abiding concern for the well-being of Russia’s citizens.
 
Friday’s labor report from the Commerce Department was another of those “That’s good — no that’s bad” pieces of information with one’s view very likely strongly correlated with the party that received one’s vote last month. The economy added 118k jobs in November and the unemployment rate fell to 7.7 per cent, its lowest rate since January 2009 when it stood at 7.8 per cent. Those are the good news. The bad news is that total employment still stands 3.3 per cent lower than at its prerecession peak in January 2008. That figure (111.744 million) is 4.6 per cent higher than at the worst of the recession and 1.4 per cent higher than last year.
 
The other piece of bad news is that the labor participation rate remains at only 63.6 per cent of the work force, just 0.1 per cent above it’s modern low set in August which was itself the lowest figure since September 1981. And even though there are more jobs and a lower percentage of the work force is out of work, we remain concerned about the amount of money they have to spend. Real per capita disposable income yr/yr growth remains very slow and every month of 2012 was revised down to below 1 per cent in October. Will these growth rates support strong meat/poultry demand?
 

CME: Sow Slaughter Numbers Steady
20 December 2012

 

US - Analysts expect USDA’s December Cattle on Feed report, due out on Friday afternoon, to continue to pattern of the past few months, indicating lower cattle numbers in the surveyed feedlots, write Steve Meyer and Len Steiner.

As has been the case with the last several reports, most attention is likely to focus on the placement number given the U.S. pasture and range conditions and progressively smaller calf crops. Relative to recent months, analysts expect this month’s number to be closer to the 2012 level.






Should the analysts’ average prediction of 93.4 per cent of year-ago level be true, it would imply the smallest year-on-year reduction in both actual numbers and percentage since June.

For some time, we noted that this year’s numbers were being compared to unusually large numbers last year but it is important to note that last year’s placements in both October and November were VERY close to the 5-year average, meaning they, though large, were not unusually so.

 Further, the range of the analysts’ estimates is not large — at least for this number, which sometimes sees widely divergent predictions — suggesting some degree of consensus for November placements. The estimate range implies placements of 1.7 to 1.8 million head.

Should the average estimate for year-on-year change in feedlot inventories (93.4 per cent) be true, the December 1 number will be 11.259 million head, the smallest December number since 2002. And, where placements got closer to year-ago levels October and are expected to do so again in November, the feedlot inventory is getting farther and farther from the levels of both last year and the 2006-2010 average.




The reason, of course, is that the inventory of cattle in these lots is the cumulative result of these smaller placements. It is important also to note that the first of those smaller placements versus one year earlier occurred in July and those cattle will not, for the most part, be in the slaughter mix until January or later. Bottom line: We still haven’t seen the impacts of these lower feedlot numbers in steer and heifer slaughter.




Look for a recap of the Cattle On Feed report in Monday’s DLR. Where is the U.S. swine breeding herd headed? That is a question on many minds as we approach the next quarterly Hogs and Pigs report on December 28.

 The 2012 drought and sharply higher feed costs had many expecting a significant liquidation last summer but the data certainly do not suggest a large shift and may not suggest much of a change at all relative to September 1 or next year.

Chicago-based analyst Kevin Bost, in his excellent weekly 'Meat Markets Under a Microscope' newsletter pointed out that sow slaughter as a percentage of the breeding herd was quite high in September, moderated in October, basically matching the five-year average for the month, but then fell to its lowest November level since 2008. “Wonder of wonders, this pattern coincided with the hog market’s price performance,” wrote Bost. And we heartily agree.

As cash hogs and Lean Hogs futures recovered from the “get them off feed” supply flood of August and September, producers’ outlook for the future improved — as well it should have with a number of 2013 months turning profitable and forecast losses getting as low as $1.54/head.

That figure has gotten less favorable in recent weeks but this is usually the worst of cash hog prices and as cash improves so will futures. Bost goes on to say he expects the breeding herd to be down 0.3 to 0.4% in the December report.

 We think that is a pretty reasonable number at this point. USDA called Dec-Feb farrowings at 98.5 per cent of last year, a figure that Bost thinks looks reasonable. But will a Dec 1 herd only slightly smaller than last year result in farrowing reductions that large from March forward? That seems a stretch and, should litters continue to grow 1-2 per cent/year, there may be plenty of pigs next fall.

US Swine Economics Report
27 December 2012


 
Ron Plain
 
US - On 28 December, USDA will release the results of their latest survey of the US swine inventory, writes Ron Plain in his latest Swine Economics Report.

My estimates are that the breeding herd is 0.9 per cent smaller than a year ago; the market hog inventory is 0.7 per cent smaller; and the total herd is 0.7 per cent smaller than in December 2011. My estimates of the December 1 market hog inventory by weight groups are: 180 pounds and heavier 100.5 per cent, 120-179 pounds 99.6 per cent, 50-119 pounds 99.2 per cent, and under 50 pounds 98.5 per cent of a year earlier.
 
September-November sow slaughter was down 0.4 per cent out of a sow herd that was 0.3 per cent smaller than 12 months earlier. The number of Canadian sows imported for slaughter was down 2.6 per cent, so adjusted for imports, slaughter of US sows was unchanged from a year ago. Our gilt slaughter data shows more gilts retained this fall than last.
 
Slaughter of barrows and gilts during September-November was up 2.4 per cent from a year earlier. USDA’s September report implied fall slaughter would be up about 1.8 per cent. USDA will likely revise upward the size of the March-May pig crop. I believe delayed marketings from the hot summer accounts for part of the higher-than-expected September-November hog slaughter.
 
In their last inventory report, USDA predicted that September-November farrowings would be down 2.7 per cent and December-February farrowings would be 1.5 per cent lower than a year earlier. I think that fall farrowings were actually down 2.5 per cent. I’m forecasting winter farrowings to be down 1.5 per cent and March-May farrowings down 1.0 per cent compared to last spring.
 
I’m estimating pigs per litter to have been up 1.0 per cent this fall. My estimate is the September-November pig crop was 98.5 per cent of a year earlier.
 
My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the first quarter will be 0.5 per cent below year-ago levels. I expect hog slaughter during the second quarter of 2013 to be down 1.1 per cent on a daily basis compared to the number slaughtered in April-June 2012.
 
Look for third quarter 2013 slaughter to be down 0.5 per cent. I expect fourth quarter 2013 daily slaughter to be even with this year.
 
I expect live hog prices to average close to $61/cwt ($81/cwt carcass) in the first quarter of 2013 and $72/cwt ($95 carcass) in both the second quarter and the third quarter of 2013; and $62/cwt ($82/cwt carcass) in the fourth quarter of 2013.
 

Hog Outlook: Hog Inventory Down at Start of December
31 December 2012


 
Ron Plain
 
US - USDA's latest Hogs and Pigs Report said the market hog inventory was down a tiny 0.04% at the start of December and the breeding herd was up 0.2%, write Ron Plain and Scott Brown, University of Missouri.

USDA said September-November farrowings were down 1.0%, but because of a 1.3% increase in pigs per litter, the fall pig crop was 0.3% larger than a year ago. Pre-release trade estimates were for a 1% smaller pig crop.
 
Survey respondents predicted December-February farrowings would be down 1.6% and forecast March-May farrowings to be down 1.2%. The USDA numbers are much more bearish than the average of the pre-release trade estimates.
 
The national average negotiated carcass price for direct delivered hogs on the morning report today was $80.40/cwt, up $1.66 cents from last Friday. The western corn belt was $2.92 higher than last Friday at $81.64/cwt. The eastern corn belt averaged $79.95/cwt and Iowa-Minnesota had a morning price average of $83.16/cwt today.
 
Peoria had a live top of $52.50/cwt on Friday. Zumbrota had a top today of $56/cwt. The top for interior Missouri live hogs Friday was $55.75/cwt, unchanged from the previous Friday.
 
The Thursday afternoon calculated pork cutout value was $81.56/cwt, down 34 cents from the previous Thursday. Loins and hams were lower, pork bellies steady, and butts a bit higher. The pork cutout value is $4.47/cwt lower than a year ago.
 
The national average hog carcass price this morning is 98.6% of the cutout value, which is high.
 
Because of Christmas, hog slaughter was light this week. Hog slaughter this week totaled 1.755 million head, down 25.0% from the week before and down 10.5% compared to the same week last year.
 
The average barrow and gilt live weight in Iowa-Minnesota last week was 273.6 pounds, unchanged from a week earlier and down 2.1 pounds from a year ago. This was the 13th consecutive week with weights under the year-ago level.
 
Year-to-date hog slaughter is up 1.7% while pork production is up 1.8%.
 
Hog futures lost ground this week. Friday's close for the February lean hog futures contract was $86.37/cwt, down 53 cents from the previous Friday. April hog futures ended the week $1.50 lower at $90.12/cwt. May hogs settled at $97.60/cwt; June hogs at $99.60/cwt.

USDA Hogs and Pigs

Reports» USDA Hogs and Pigs » USDA Hogs and Pigs - December 2012

28 December 2012
USDA Hogs and Pigs - December 2012
The latest quarterly Hogs and Pigs report from the USDA's National Agricultural Statistics Service (NASS).


 
Introduction
 •USDA Quarterly Report: December 2012
 •What It All Means - Expert Commentary
 •In the News - What the Media Says
 •Graph Data from the Report
 •Hog Inventories by State (external link - select State and navigate to file)
 
For a PRINTABLE VERSION of the full 16-page report in PDF format, including all the tabular data that is not shown in this article, please click here
 


USDA Quarterly Pigs and Hogs Report: December 2012
 
United States Hog Inventory Down Slightly
 
United States inventory of all hogs and pigs on December 1, 2012 was 66.3 million head. This was down slightly from December 1, 2011, and down 2 percent from September 1, 2012.

Breeding inventory, at 5.82 million head, was up slightly from last year, and up slightly from the previous quarter.

Market hog inventory, at 60.5 million head, was down slightly from last year, and down 2 percent from last quarter.

The September-November 2012 pig crop, at 29.4 million head, was up slightly from 2011. Sows farrowing during this period totaled 2.90 million head, down 1 percent from 2011. The sows farrowed during this quarter represented 50 percent of the breeding herd. The average pigs saved per litter was a record high 10.15 for the September-November period, compared to 10.02 last year. Pigs saved per litter by size of operation ranged from 7.60 for operations with 1-99 hogs and pigs to 10.20 for operations with more than 5,000 hogs and pigs.
 

Quarterly Hogs and Pigs Inventory – United States: December 1
 


United States hog producers intend to have 2.86 million sows farrow during the December 2012-February 2013 quarter, up slightly from the actual farrowings during the same period in 2012, and up 1 percent from 2011. Intended farrowings for March-May 2013, at 2.93 million sows, are down 2 percent from 2012, but up slightly from 2011.

The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 47 percent of the total United States hog inventory, up from 45 percent last year.
 
Revisions
 
All inventory and pig crop estimates for March 2011 through September 2012 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. Based on the findings of this review, an adjustment of less than one and one half percent was made to the June 2012 total inventory. An adjustment of less than one half of one percent was made to the September 2012 total inventory. An adjustment

Hog Outlook: Change in Forecast for 2013 Pork Production
14 January 2013


 
Ron Plain
 
US - USDA's January production and price estimates were bullish for grains and bearish for meats, write Ron Plain and Scott Brown.

Today's USDA supply and demand estimates changed the forecast for 2013 pork production from down 1.7 per cent compared to last year to up 0.2 per cent. USDA changed their beef production forecast from down 5.0 per cent to down 4.3 per cent. Broiler production in 2013 is now predicted to be down 0.4 per cent rather than down 1.3 per cent. Their forecast of turkey production changed from down 3.2 per cent to up 0.3 per cent. Total red meat and poultry production in 2013 is now predicted to be 1.3 per cent lower than in 2012 rather than down 2.6 per cent. With more red meat and poultry production expected, USDA increased their estimate of feed and residual for grains by 395 million bushels.
 
The national average negotiated carcass price for direct delivered hogs on the morning report today was $79.62/cwt, down $3.42 from last Friday. The eastern corn belt was $1.59 lower than last Friday at $79.05/cwt. The western corn belt averaged $81.70/cwt this morning and Iowa-Minnesota had a morning price average of $82.11/cwt. Peoria had a live top of $53.50/cwt on Friday. Zumbrota had a top today of $56/cwt. The top for interior Missouri live hogs Friday was $57/cwt, down $2.25 from the previous Friday.
 
The Thursday afternoon calculated pork cutout value was $83.47/cwt, up 37 cents from the previous Thursday. Hams and belly prices were higher, but loins and butts were lower. The pork cutout value is 64 cents per hundred pounds lower than a year ago. The national average hog carcass price this morning is 95.4 per cent of the cutout value.
 
Hog slaughter this week totaled 2.284 million head, up 16.0 per cent from New Year's week and up 3.0 per cent compared to the same week last year. Since the first of December, hog slaughter is 0.6 per cent below the level implied by the market hog inventory.
 
The average barrow and gilt live weight in Iowa-Minnesota last week was 276.3 pounds, up 0.5 pound from a week earlier, but down 1.7 pounds from a year ago. This was the 15th consecutive week with weights under the year-ago level.
 
Livestock futures were sharply lower on Wednesday with the release of USDA's Broiler Hatchery report. Because of high feed costs, most analysts have been expecting poultry production to be down in 2013. But, USDA says the number of broiler-type eggs set the week ending January 5 was up 1.6 per cent from a year ago. This was the fourth consecutive week with egg set above the year-ago level.
 
Friday's close for the February lean hog futures contract was $84.20/cwt, down $2.02 from the previous Friday. April hog futures ended the week $2.73 lower at $87.12/cwt. May hogs settled at $94.80/cwt; June hogs at $96.50/cwt.
 
Nearby corn futures ended the week back above $7.

Hog Outlook: Economic Data not Encouraging for Meat Demand
04 February 2013


 
Ron Plain
 
US - This week's numbers on the US economy are not encouraging for meat demand, write Ron Plain and Scott Brown, University of Missouri.

The nation's gross domestic product declined by 0.1 per cent in the fourth quarter of 2012. January's unemployment rate was 7.9 per cent, up 0.1 from December. The number of Americans working is still 3.2 million below the pre-recession peak. US meat production is expected to be 1.3 per cent less than last year which will mean higher livestock prices, if consumers can afford to pay the higher grocery store price for meat.
 
USDA's January cattle inventory report lowered their estimate of the 2012 calf crop by 221,000 head to 34.279 million, the smallest since 1949.
 
Thursday afternoon's calculated pork cutout value was $85.04/cwt, up 34 cents from the previous Thursday. Loin and belly prices were higher, but hams and butts were lower. The pork cutout value is 9 cents per hundred pounds higher than a year ago. The national average hog carcass price this morning is 98.3% of the cutout value.
 
The national average negotiated carcass price for direct delivered hogs on the morning report today was $83.59/cwt, up 27 cents from last Friday. The eastern corn belt this morning averaged $83.53/cwt. The western corn belt and Iowa-Minnesota both averaged $85.87 on the morning price report. The east-west price spread was wide most of the week.
 
Both Peoria and Zumbrota had a live top of $58/cwt on Friday. The top for interior Missouri live hogs Friday was $59.25/cwt, unchanged from the previous Friday.
 
Hog slaughter this week totaled 2.176 million head, up 1.1 per cent from last week and up 2.1 per cent compared to the same week last year. Total barrow and gilt slaughter during the last nine weeks is quite close to what was predicted by the December inventory report.
 
The average barrow and gilt live weight in Iowa-Minnesota last week was 275.1 pounds, up 0.2 pound from a week earlier but down 0.4 pound from a year ago.
 
Friday's close for the February lean hog futures contract was $87.65/cwt, up 83 cents from the previous Friday. April hog futures ended the week 17 cents lower at $88.75/cwt. May hogs settled at $96.60/cwt; June hogs at $97.50/cwt.
 
Corn and soybean meal futures both ended this week higher than last.

CME: US Pork Trade with China
21 February 2013
 

US - Lean hog futures continued to slide on Tuesday as the nearby April contract closed down 120 points. All other contracts were down as well, write Steve Meyer and Len Steiner.

Futures extended their losses overnight, with the electronic April Lean Hog contract now at $82.725/cwt, the lowest point for this contract since July of last year. Lean hog futures have dropped almost $8/cwt (-8.3 per cent) since the end of January. The decline largely reflects lower wholesale values, will almost all pork primals (belly being the exception) currently below year ago levels (see DLR 2/14). Further adding to the anxiety in the pork complex, wire services reported last night and this morning that China is preparing to require that all pork exported to that country include a third party verification that product is free of ractopamine.
 




According to Reuters: "China wants a third party to verify beginning 1 March that US pork shipped to the country is free of a feed additive used to promote lean muscle growth, a US Meat Export Federation spokesman told Reuters."
 
At this point there appears to be little clarity as to what will be the requirements for the third party verification process. China already requires that all pork that currently goes to that market be ractopamine free but the task of testing for the substance currently falls on Chinese inspectors. In the past, US product has been refused entry when trace amounts have been found.
 
It is difficult at this point to say what the impact of this added requirement will be on US pork trade with China. Without a clear protocol for verifying product is ractopamine free, China could potentially block entry of US product. This would be quite damaging to US pork trade in the short term as product could back up and need to be absorbed via domestic channels or other markets. It is particularly concerning that the timeline for this expected announcement is quite short, and product that is already on the water may be affected.
 
It is expected that an announcement about the new policy will be made by the Chinese Administration of Quality Supervision Inspection and Quarantine. Presumably at that time we will know more about the changes to the current export regime. This development in pork trade with China follows the announcement by Russia that it will stop imports of US beef and pork due to the use of ractopamine. Both the Russian demands that US pork be ractopamine free and China decision to require third party verification come despite a decision by the UN Nation’s food standards body that product is considered safe for human consumption as long as ractopamine residue levels are within specificed limits.
 
According to the UN commission "the ractopamine limits are set at 10 micrograms per kg of pig or cattle muscle, 40 micrograms per kg in the animals' livers and 90 micrograms per kg in their kidneys." Despite UN approval, these latest developments highlight the risks to export trade and show how vulnerable the US pork market is to non-tariff barriers. The decision by China follows a period when the Chinese domestic pork industry there is expanding.
 
Pork prices in China reportedly are still higher than they were back in 2009 (prior to the price spike) but have pulled back significantly since 2011 when China embarked on a short lived buying spree of US pork, making it the top market for a period of time. The potential disruptions to China trade are arguably more significant than with Russia (see chart). Combined China and Russia exports in 2012 accounted for 4 per cent of all US pork produced. For now, we wait.
 

CME: US/Canada 2012 Hog Inventory Lower Than Previous Year
08 March 2013
 

US - Statistics Canada released its semi annual estimates of cattle and hog inventories which combined with the recently released numbers from USDA provide a more complete picture of overall cattle and hog supplies in North America (Mexican numbers are somewhat more opaque but are an important part of the picture given the significant number of Mexican feeders flowing into US feedlots), write Steve Meyer and Len Steiner.

Please note that Statistics Canada has cut the frequency of the hog inventory report from quarterly to semi-annually due to budget cuts. This makes it more challenging to properly match up US and Canadian data during certain parts of the year and reduces the supply flow visibility. Below are some of the highlights from these reports:
 •Despite the surge in grain prices in North America in the second half of 2012, combined US/Canada hog inventory levels at the end of 2012 was 79.068 million head, just 0.1 per cent lower than the previous year. The Canadian hog inventory as of 1 January 2013 was 12.720, down 0.5 per cent from the previous year.
 •The combined US and Canadian hog breeding herd took a step back (see chart). The breeding stock through Q2 of 2012 had been steadily increasing following the dramatic liquidation after the 2008 feed price spike and the financial crisis. However, at the end of 2012 the breeding herd inventory in Canada was pegged at 1.208 million head, down 0.9 per cent from 2011 levels. The combined US and Canada hog breeding stock was 7.025 million head, slightly above year ago levels but down 0.7 per cent compared to where it was back in June 2012.
 

•Statistics Canada has stopped reporting estimates on the pig crop and farrowings. The lack of this data makes it difficult to come up with any sort of reliable estimate as to the supply of pigs coming to market in the coming quarters. It is a reminder of the impact that budget cuts can have on the quantity and quality of data, which sometimes is taken for granted.
 •Cattle inventories in Canada as of 1 January 2013 were estimated at 12.275 million head , 0.5 per cent higher than the previous year. This is the second consecutive year that Canadian inventories have increased but the inventory level remains dramatically lower than its 2005 peak of almost 15 million head.
 

•As with hogs, the beef cow inventories have declined dramatically since the grain price spike and financial crisis. The combined US and Canadian beef cow inventory as of 1 January 2013 was 33.252 million head, down 2.6 per cent from the previous year. The combined inventory is now down almost 12 per cent compared to where it was in 2006. Canadian producers intended to rebuild their beef cow herd in 2012 as the number of heifers held back for beef cow herd replacement jumped 5.6 per cent. This follows a similar kind of increase in 2011. But despite two consecutive years of increases in heifer retention, the beef cow herd in Canada has continued to decline. High feed costs and drought in the US have cut short any expansion plans. The beef cow herd in Canada as of 1 January was 3.956 million head, down 1 per cent from a year ago and down 25 per cent from its peak in 2005.

CME: Total March Hogs & Pigs Inventories Expected to be Higher
28 March 2013
 

US - In addition to two very important grain reports (see DLR 3/26), USDA will also release on Thursday (3PM ET) the results of its quarterly survey of hogs and pigs inventories as of 1 March 2013, write Steve Meyer and Len Steiner.

On average, analysts expect total hogs and pigs inventories as of 1 March to be 0.7 per cent higher than the previous year. The total inventory of hogs and pigs on the ground is a function of the number of pigs that were added to the overall inventory on 1 December (pig crop, imports) and the number of hogs and pigs that were removed (slaughter, death loss).
 
So far the balance sheet tends to be close to the average of analysts estimates, although much still depends on key assumptions, especially about the size of the pig crop in the past quarter.
 
Analysts expect the pig crop for the December through February quarter to be 1.2 per cent larger than the previous year, an increase that adds about 350,000 head to the available supply for the quarter compared to the previous year.
 
One caveat in this regard is that this assumes no revisions to previous year’s numbers. The pace of hog imports from Canada was notably slower this year compared to the year before and that will reduce the number of hogs that entered the total hog supply for the quarter.
 
Weekly data from USDA shows that for the period December through February, total hogs and pig imports from Canada were down about 9.5 per cent from a year ago. This will help offset about a third of the gains in the pig crop.
 
Then there is the issue of hogs that were removed during the quarter. Based on the USDA monthly slaughter statistics, hog slaughter for the period Dec-Feb was 28.019 million head, down 1.8 per cent from a year ago. Using these inputs and also accounting for a normal death rate, one can see why hogs and pigs inventories as of 1 March 2013 are expected to be larger than they were the previous year. Again, keep an eye on those USDA revisions of prior quarters and especially on the farrowing numbers for the Dec - Feb quarter.
 


The industry has benefited in recent years from improvements in productivity, with the number of pigs per litter steadily increasing. While the pace is expected to slow down, especially as group housing is adopted more broadly, the expectation is for litter size to continue to expand, probably at a rate of about 1-1.5 per cent for the remainder of the year.
 
This is important when considering the analyst estimates for Mar-May and Jun-Aug farrowing intentions. On average, analysts expect farrowings for Mar - May to be down 1.3 per cent from a year ago. Even with more pigs per litter, it is possible that the pig crop for the quarter could be down compared to the previous year.
 
That decline combined with higher expected slaughter (see market hog inventory expectations below) and fewer hogs coming from Canada, implies that by 1 June we could have total hog inventory that is smaller than it was on 1 June 2012.
 


The breeding herd estimate is for only a modest increase compared to previous quarter (about 20,000 head) and also a modest gain on year ago levels. Female slaughter so far this year has been running below year ago levels.
 
According to the latest data from University of Missouri, year to date sow slaughter is down 1 per cent while gilt slaughter is down 3.5 per cent from a year ago. Sow prices have increased sharply in recent weeks, another indication that producers are gearing up for lower feed prices and higher production in 2014.

Pork Commentary: US 1 March Hogs and Pigs Report
09 April 2013


Jim Long is President &
CEO of Genesus Genetics.


US - The USDA released its 1 March Hogs and Pigs Report ten days ago. We were in Estonia at the time and did not see the report until our return, writes Jim Long.

Below our observations:
 


1 March (Thousand Head)

 

 

2012

2013

2013 as % of 2012

 

Kept for Breeding
 
5,820
 
5,834
 
100
 


Market
 
59,117
 
60,077
 
102
 


Market Hogs and Pigs by weight groups

 

Under 50 Pounds
 
19,235
 
19,426
 
101
 


50-119 Pounds
 
16,409
 
16,650
 
101
 


120-179 Pounds
 
12,780
 
13,509
 
102
 


180 Pounds and over
 
10,693
 
10,942
 
102
 
•It appears the USDA sow inventory is basically the same after 12 months of mostly financial losses for the industry. The staying power of producers that this reflects is amazing. To be consistent we don’t believe this number. Our observations tell us the breeding herd declined over the last twelve months. Too many producers cut back their breeding herd or quit relative to any expansion to have a sow inventory that did not decline. We could be and maybe are wrong but it’s what we believe. If we held sow inventory it will be first time in swine history when sow inventory did not decline with hog to corn ratio consistently under 15 to 1.
 •Market Inventory is showing 1 per cent more in the under 120 lb. category which will be hogs coming to market in May or later. We expect when hog supply declines to almost year over year levels coupled with normal seasonal decline, lean hog prices will push closes to $1.00 lean a lb.
 



(1,000) Head

 

December - February

2012

2013

2013 as % of 2012

 

Sows Farrowing
 
2,864
 
2,879
 
101
 


Pig Crop
 
28,550
 
29,019
 
102
 


Pigs per Litter
 
9.97
 
10.08
 
101
 

USDA data shows the continuation of productivity increases in our industry. Bigger litters better farrowing rate leading to a bigger pig crop. We expect this trend to continue as we all push towards more efficiency due to the need to financially survive.
 
There is no doubt hog producers are hanging on the hope and optimism to get to cheaper feed. The USDA’s release a couple weeks ago of larger than expected corn inventory took almost $1.00 a bushel of nearby corn. Dropping the cost to produce a market hog about $10.00 per head. Anyone who is engaged in the industry knows the South American corn and soybean crop is a record. The USDA projects US corn average plantings at the highest in eighty years. Almost everyone knows the US has never had two severe droughts in a row. There are market guru’s in Chicago taking corn at $3.50 a bushel if the crop comes in as projected of 14 billion bushels plus. To some extent we don’t have a hog market we a have a grain market. For many then, live and fortunes are tied to the global supply and price of feed products. The hog supply of 1 per cent either way pales to a corn crop that could vary 30 per cent in supply? Swine cost of production due to feed could reasonably move $30-40 per head. A 1 per cent change in hogs is almost irrelevant. Our lives are tied to feed cost. Pray for rain.

Report on Iowa Pork Congress
Tuesday, April 16, 2013

 


A report on the Congress by Doug Richards, Swine Grower-Finisher Specialist with Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA), published in its 'Pork News and Views' newsletter.

In January, reports Mr Richards, he travelled to the 41st annual Iowa Pork Congress in Des Moines Iowa. The two-day trade show/seminar/state pork association meeting is one of the largest gatherings of pork producers and industry in the US, surpassed only by the World Pork Expo held in June. He spent two days talking to industry exhibitors, producers, taking in most of the educational seminars and attended the Iowa Pork Congress Awards Banquet. Below are some observations from his trip.

Among the areas in which Iowa ranks first are all hogs and pigs inventory, all hogs and pig value, commercial hog slaughter, sows farrowed, corn for grain production, soybean production, capacity of on-farm storage and egg production.

The lack of moisture was evident in the city of Des Moines. They had only one major storm in December, leaving about one foot of snow that was all but gone by mid-January. The city pulls water from rivers that run through the city which are very low so they are using a local reservoir for the first time.

 Iowa is the heartland of the US pig industry. This show attracted over 500 industry exhibitors that have products, software, feed/supplements, machinery, pharmaceuticals and genetics that are of value to hog producers. There were lots of innovative products to help with all aspects of raising hogs.

The mood of the show was positive and upbeat. The crowds were good and the exhibitors seemed pleased with the numbers.

 The pride of being a pork producer and being honoured by your fellow producers was evident at the Iowa Pork Congress Awards Banquet, sponsored by Iowa Pork Producers’ Association (IPPA). They gave out one Environmental Steward Award to a family with a 7,200-head wean-to-finish barn (on contract), plus 480 acres of crop-land. Some of the unique features were a 50-kW turbine to help offset power use; wet-dry feeders, water cups and pre-soakers to reduce water consumption. Vertical conservation tillage to reduce soil compaction and a nitrogen stabiliser was used to preserve nutrients in the soil, improve crop yield and protect water quality. They also planted grass waterways to limit runoff and provide refuge for wildlife, along with windbreaks to reduce dust and odour from leaving the farm. They are active in their community by donating free pork to numerous area events, providing free pork to all neighbours with one mile of the barn site, and communicating with those neighbours prior to applying manure.

IPPA presented 10 Master Pork Producer Awards to producers throughout the state along with Master Seedstock Producer and All-American Award.

 The IPPA does an excellent job at getting the youth involved in pork production through their Iowa Pork Youth representatives programs that had 17 youth vie for Pork Queen/Princess/Ambassador Program. The winners of these awards will spend the year promoting their industry and the use of pork products to consumers. The Congress also held a Youth Swine Judging Contest off-site.

Producer Seminars Highlights

Swine health update: Porcine Reproductive Respiratory Syndrome (PRRS) control measures
 
Dr Cameron Schmitt, Pipestone Vet Clinic
 •Need to have good biosecurity protocols on all farms. Sow barns need good isolation barns for incoming gilts along with proper testing standards.
•Biosecurity in the transport sector needs to be improved
•PRRS is still the number one issue in Iowa
 •Filtered barns do help reduce PRRS infection, but the weak link is air leakage in the barns
 •One study showed a 61 per cent reduction on PRRS infection in filtered barns but the cost for filtering ranged from $130 to $260 a pig space
 •PRRS challenge/infection is highest between October and mid-December in the upper mid-west US.

Future of antibiotics
 
Dr Jim McKean - Iowa State University
 •US government is looking at the use of antibiotics in livestock with the Food and Drug Administration (FDA) becoming more involved
 •In future, expect more restricted/limited use of currently used products
 •Need of a prescription for some current over-the-counter products
•Drugs will be for treatment only and not for prevention
 •Producer will be facing more regulations
 •Food Safety and Inspection Service (FSIS) which is part of the USDA, is using an new quick test for drug residue detection in meat plants which allows for the checking of 52+ chemicals
 •If carcasses are found with reportable residue levels and can be linked to producers, those individuals may find inspectors visiting their farms
 •Producers in the audience were not in favour of government inspectors on farm
 •National Pork Producers Council (NPPC) and producers lobbying on the change to drug policy and the on-farm inspections
•This may become a large issue for US pork producers and meat processors

Evaluating sow housing decisions

Panel Discussion
 •Several studies on sow stalls and loose sow housing looking at different criteria were presented
 •Producers presented on the different types of sow housing that included electronic sow feeders (ESF) and loose sow stalls with trickle feeders and sorter. The pros and cons of the different systems were outlined
 •Producers presenting made a point of saying it was their choice to raise sows in that system and no one system is better than the other
 •NPPS staff talked on the issue of 40-plus food companies signing on to remove pork products from their product line that are raised in stalls. They had two companies wanting to source only gestation free pork products.
 •NPPC was now meeting with many of those companies to look at the implications of their decision. Many did not really know what the issue was and NPPC was now working with them to help better understand the science behind current pork production practices.
 •My take home message was the US producer pork does not want to be told how to raise sows. They want the choice to choose the system they feel is best suited for their operation. They see the stalls and loose housing being equal and will use science and not public opinion to decide how they raise sows.

Progress on pit foaming
 
Drs Chuck Clanton, University of Minnesota and Steve Hoff, Iowa State University

The results from the 2012 producer survey from four states, with 18 participants, 102 rooms, 80 pits comprised 71 per cent grow-finish, 29 per cent wean–finish. 15 producers had foam in 39 pits or 49 per cent, of those three had flash fires while pumping/agitating or while doing repair work.
 •This is a problem which is not going away.
 •IPPA has put $1 million towards the study of pit-foaming. They would like to find the cause that leads to foaming in deep pits.
 •Multi-state effort - Iowa State University, University of Minnesota, University of Illinois involving 20 plus academic professionals with expertise in manure management, chemistry, microbiology, feed rations and digestibility - and multi-year project to work on the different areas of pit foaming.
 •They are conducting a producer survey to help get more information on the problem in barns with deep pits.
 •Will have extensive manure testing and dietary feeding trials.
 •They have found a cattle feed additive that will help reduce or eliminate the foam from pits but it is not the solution to the problem.
 •The University of Minnesota will soon have a factsheet out on using the product to reduce pit foaming.

Lower Feed Prices Could Help Hog Producer Profits
26 April 2013
 



Purdue News
 



US - Hog producers should return to profitability this spring because of lower feed prices, although delayed planting could still change that, a Purdue Extension agricultural economist says.

Chris Hurt said the animal industries got an unexpected boost from the US Department of Agriculture's grain stocks report at the end of March.
 
"Inventories of both corn and soybeans were much higher than anticipated, and that seemingly indicates that greater supplies of both corn and soybean meal are going to be available for the rest of this marketing year," he said. "A dramatic downward movement in feed prices had not been expected until mid- to late summer."
 
Corn prices dropped nearly $1 per bushel and soybean meal prices about $15 per ton.
 
Mr Hurt had earlier predicted that hog production could return to profitability this spring, but that was based on an expected spring hog price rally, not lower feed costs.
 
"Estimated costs for farrow-to-finish production had been around $70 per live hundredweight in the first and second quarter of this year," he said. "Now, my estimates for second-quarter costs have fallen to about $65.50 and to around $63 per hundredweight for the third quarter."
 
In the first quarter of this year, live hog prices averaged near $62 per live hundredweight. Hurt expects those prices to continue to rise to the mid-$60 range for the next two quarters.
 
If that happens, he said second-quarter prices should cover production costs and hog producers could see small profits of around $8 per head in the third quarter - the first profits they've seen since 2011.
 
If farmers are able to get the 2013 crops planted in a timely manner, feed costs are expected to continue falling for the remainder of this year and into early 2014.
 
Starting early this fall, total costs of hog production could drop to under $60 for the first time since 2011. But while the optimism is welcome after losses of about $26 a head for the last three quarters, Hurt said feed prices could still change and cause production costs to rise.
 
"Of course, weather this summer and the size of the 2013 crop production is another uncertainty of feed costs," he said. "If late planting or poor summer weather results in another below-normal production year in 2013, that could clearly push up new crop prices and maybe push them up substantially."
 
But on the other hand, a more normal production year for the US could provide some cushion against the next small crop and help stabilise feed prices for the next few years.
 
 

AMI Releases Video Tour of Pork Plant
09 May 2013

US - The American Meat Institute (AMI) has released a video tour of a pork processing plant, hosted by animal welfare expert, Dr Temple Grandin.

AMI has released a video tour of a pork slaughter plant hosted by leading animal welfare expert Temple Grandin, Ph.D., professor of animal science at Colorado State University. The video is available on the Institute’s dedicated animal welfare Web site, www.animalhandling.org.

Also released with the video was a print companion brochure that may be downloaded from AnimalHandling.org. Single copies also are available upon request from the AMI. The pork plant video tour and brochure augment the beef plant video tour, also hosted by Dr Grandin, which was released in August 2012. Since its release, the beef plant video has been viewed nearly 50,000 times on line and in countless classrooms and other settings.

The latest pork video tour starts on the farm in a finishing barn, depicts pig loading on trailers, unloading at the plant, stunning of pigs to make them insensible to pain, which is required by law, the bleeding process, carcass chilling and fabrication of carcasses into cuts that consumers eat. The video details the widespread use of the AMI animal welfare audit, developed by Dr Grandin for the industry in 1997, and now a global standard.

Dr Grandin selected the two plants that are featured in the video as representative of typical beef and pork slaughter plants. She was on-site for the taping and narrated the videos in her own words.

“I’m really pleased the American Meat Institute is working on putting these videos out because I think we need to show people what’s done in the industry when it’s just done right in a typical large plant,” she says in the introduction to the video. The brochure also includes a series of commonly asked questions about animal welfare with answers provided by Dr Grandin.

“We recognise that many consumers want more information about how livestock are handled and processed in US meat and poultry plants. Our Glass Walls Project is an effort to increase transparency,” said AMI Senior Vice President of Public Affairs and Member Services, Janet Riley, who also serves at liaison to the Institute’s Animal Welfare Committee.

She continued: “We were fortunate that Dr. Grandin, a leading expert on animal handling and welfare in meat plants, agreed to host the video tours and played such a pivotal role in their production. We are proud to offer an honest look inside our plants and to show the public our long-standing commitment to ensuring optimal livestock welfare.”

To view the videos or download the brochures, visit http://www.animalhandling.org/. To request a hard copy of the brochure, send a self-addressed, stamped envelope to AMI Glass Walls Project, 1150 Connecticut Ave, NW, Suite 1200, Washington, DC, 20036.