Pork Commentary: London Swine Conference Report12 April 2016
CANADA - This past week we attended the London Swine Conference held in London Ontario, writes Jim Long President – CEO Genesus Inc.
Ontario has about 300,000 sows. It has the largest contingent of independent producers in North America. The two largest producers are just over 10,000 sows each.
Most producers are of Dutch ancestry. Their own land, grows corn and have swine. The business model has been quite successful with the huge benefit of farmland currently selling for $15-20,000 per acre. Producers have good equity. Profits for farrow to finish are currently $15 per head but prospects are such that from May to August it should increase to $50. It’s not hard to see why producers attending were feeling pretty good about the industry.
The Ontario Industry is having pressure to move to open gestation housing. A Nedap company specialist spoke at the conference on their transponder group sow housing. The Gestal Group proponents of the free stall approach were touting a 5,000 sow conversion to their system. Going forward it will be interesting to see which approach takes over. Beta or UHS.
Ontario is short of packing space. Between 20-30,000 hogs per week have to go to the U.S, Quebec or Manitoba. This has cut basis of Ontario hogs. There is discussion ongoing by some larger producers to build their own plant. The large margins that perceived packers have made is the same driver seen in the U.S with the new producers owned plants under construction.
The London Swine Conference was well attended with over 600 participants for the two-day event. It was well organized and had numerous speakers that as usual never owned a pig and never will. Always seems that at most conferences the preaching at producers from academics is the main activity. The conference system generally creates the agenda. Most conference committees have next to no people that own pigs. This leads to their self-interests being addressed. It’s the way it is all over the world.
U.S Sow Herd Expansion
The U.S March Hogs and Pigs Report indicates the U.S sow herd has not grown in the last year. Recently we had the opportunity to visit with a major swine equipment company. They have quoted or know of 100,000 new sow places being contemplated. They suspect there could be 20,000 they don’t know of. So lets say 120,000 in total. They believe that for various reasons of the 120,000 about 60,000 will be built. Not exactly a massive expansion especially when you consider there will be old sow barns going out of production. We agree with the 60,000 new sow place number.
What goes down must go up? It seems to be true in China. They eliminated 11 million sows. Subsequently China hog prices have jumped U.S $125-150 per market hog. Profits are real good. We expect further pork inputs to China. One North America packer told us recently the China market was adding $20 to their current cut-out value. Big money and we suspect it will continue.
“Talkers are usually more articulate than doers, since talk is their specialty.”
|Author: Jim Long, President & CEO, Genesus Genetics|
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