Pork Commentary: EuroTier13 November 2014
GERMANY - We're heading to Euro Tier, the largest exhibition of livestock and poultry, which is held every two years in Hanover, Germany, writes Jim Long, President - General Director Genesus Inc.
We have visited this event three times before, but this will be the first time exhibiting. The Genesus stand will be located in the exhibition hall 9, place C21. We expect there will be a lot of breeders from Europe and Asia, and quite a bit from North America. Next week, we will share their impressions of EuroTier and the situation on the world pork markets.
In the US there is an unhurried harvest corn. It seems that farmers do not sell too much corn, the price of which has reached the lower limit. DTN National Corn Index averaged $ 3.29 / bushel ($ 129.52 a ton) - not much higher than the five-year low. In May this year, the national index DTN was $ 4.82 / bushel ($ 189.75 a ton).
Without doubt, the cost of production of pigs in the United States decreased by at least $ 30 per head. We believe the huge crop will further reduce the cash price for corn.
Apparently, the cash price of pigs has overcome the lower limit. We do not expect a significant reduction in the coming weeks, on the contrary, the general upward movement - in the range of 85-87 cents per pound of lean pork ($ 1.87 - 1.92 / kg) at the moment.
Collectors earn - price carcasses in slaughter weight is in the range of 95 cents per pound ($ 2.09 kg) and it will serve as a good incentive for highly intensive filling slaughterhouses. Last week, the US has sold 2.232 million hogs, the biggest weekly sales for 2014. Nevertheless, it is at 50,000 less than in the same week a year ago. The average weight of the implementation is 216 pounds (98.18 kg), a year ago - 211 pounds (95.90 kg). The difference in 5 pounds (2.27 kg) when compared with last year - this is a small discrepancy, which we could see in a few months. We believe that in the next few months, the gap will continue to shrink.
In the US, the spot price on early weaning piglets ($ 67.99) and forty pounds (~ 18 kg) pigs rearing ($ 81.33) remains high. Reflection of a very strong demand on the proposal.
In the first week of November in the US, it was reported 65 new outbreaks of epizootic diarrhea virus of swine virus (PED). About as much as a year ago. It's hard to say what will happen in the past year the number fell to January, when recorded over 200 cases per week. Epizootic diarrhea virus of swine (PED) - absolutely unpredictable moment, if we talk about the scenario of supply in 2015. We believe, as compared to the previous year level of PED will be lower in the coming months, mortality decreased by approximately 50% or approximately 3 - 4 million pigs.
Buying a Chinese company Smithfield Foods WH Group looks very smart deal after Smithfield, a subsidiary of WH, gave a report on the third quarter of this year.
There was a saying: 'Do you want to learn how things work in the US automotive industry, see how things are going in General Motors'. The same can be said of Smithfield, but for pig industry! Net income Smithfield, the largest producer of pigs, meat processors and custody, in the third quarter was $ 155 million. Operating profit Smithfield pork segment this quarter, September 28, was $ 139 million, a year ago it was $ 48.5 million. Operating income from Smithfield pig in the past nine months were $ 278.1 million, a year ago - $ 18.7 million. Given that a $ 18.7 million does not include any overhead, quite possibly, in the nine months of last year, the department of production pigs lose money. In the last quarter of Smithfield reports an operating profit of $ 42 per head. Because virus PED sale based on the head reduced by 14%, but at the same time, the weight of the carcasses was 4% higher. In the last quarter of Smithfield reported market price of $ 85 per hundred pounds of live weight increase of 17% compared to last year. In the coming months will be an explosion in China pork prices due to liquidation of 5 million sows. We think, Smithfield with his many enterprises in the US, has already been approved for pork exports to China and the Chinese supply chain in the country with the mediation of the Chinese owners will benefit from the possibility of a major export. When this happens, it will reinforce the position of all breeders USA. Any pork for export, support prices for pigs. 2015 will be the year when we find out how much you need pork to China.
|Author: Jim Long, President & CEO, Genesus Genetics|
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