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Ontario - Too Much of a Good Thing?

15 June 2012
Genesus - The first power in genetics

CANADA - To my eye from my travels in Ontario I don’t know if they can be deemed less than fantastic. Now I know that runs counter to a farmer view where it’s either “too cold, too hot, too wet, too dry or at a minimum too good to last” but with a spring (perhaps summer) that seemed to start mid March everything is well advanced, writes Bob Fraser, Genesus Sales & Service, Ontario, Canada.

Crops

The bulk of Ontario farmland where hogs are produced operates on a three crop rotation of corn, soybeans and/or edible beans to winter wheat. The winter wheat is headed out for two plus weeks and is beginning to turn. Cornrows are shielding in and will easily surpass the proverbial “knee high by the fourth of July”. Beans are well established and much of the spraying and nitrogen application is complete. It would be doubtful that on the crop side that the province has been rarely better positioned for the time of year. Now I appreciate producers have ample reason to not fall victim to too much euphoria as in farming things can and do change, often rapidly and severely. We’re a long way from harvest and rain for one will need to continue (as it mostly has) to be ample and timely and Chicago will kill the crop at least twice before fall challenging perhaps even the goalposts of $4.00 to $8.00 corn. However for right now at least I believe we might do well to consider our many blessings and from whence they come.

Genesus Global Market Report
Prices for the week of May 11, 2012
Country Domestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 89.29¢ USD/lb carcass 66.07¢
Canada (Ontario) 1.63¢ CAD/kg carcass 57.53¢
Mexico (DF) 19.68 MXN/kg liveweight 63.29¢
Brazil (South Region) 1.93 BRL/kg liveweight 42.37¢
Russia 95 RUB/kg liveweight $1.32
China 13.42 RMB/kg liveweight 95.28¢
Spain 1.38 EUR/kg liveweight 78.08¢

Next week, 19-20 June 2012 Genesus will be at Ontario Pork Congress.

“Celebrate Pork” at the newly returned Beer/Refreshment tent sponsored by Genesus Inc.

Hogs

If we take a look at the OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Program Lead, Stratford OMAFRA john.bancroft@ontario.ca we see the long anticipated “summer rally” has perhaps finally arrived with margins vastly improved. The 100% Formula price has surpassed the previous year’s price for the first time in a considerable long time. It remains to be seen whether this is an aberration or whether we’re in fact headed for a period of higher prices. There is a sense that this great weather here and throughout much of the Midwest has pulled pigs ahead and now with the usual seasonal tightening of supplies coupled with summer heat could conspire to be further price positive at least for awhile. However with ingredients at the following prices this week if you’re buying feed and on the spot market margins certainly remain challenged Soybean Meal ($/tonne Hamilton + $20) - $540.97.

Western Ontario Feed Corn ($/tonne) - based on Jul '12 - $242.80.

DDGS FOB Chatham/Sarnia/Aylmer ($/tonne) - $217.50.

Prospects

Gazing into my crystal ball for the market prospects in the future is probably no clearer than anyone else’s. Whether we can get the sun and moon and the stars to align to give us relief to ingredient prices, perhaps considerable relief is still wide open for conjecture but the start to the season certainly gives ample reason to believe in the possibility. Then whether we can couple lower feed prices with high hog prices for that once in a “blue moon” much needed extraordinary margins may be too much to ask. However a replenishing of reserves is still required for renovations, upgrades and normal repair and maintenance well before any expansion thoughts at least in this province.

Something to consider, a producer I talked to recently said he was going to try harder to become a “margin taker”. Excellent point. We’ve learned we are given a considerable period of time to price inputs beyond the moment of actual use. As we have a similar wide window to price hogs beyond when we load them on the truck. In that cycle various margins are presented, many of them profitable and often presented more than once. Probably being a “margin taker” and preferably a positive one is far better than the producer’s traditional role as a price taker.


To find out more about Genesus Genetics, please take the time to visit their website at www.genesus.com .



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