Our observations on the Minnesota Pork Congress:

• There was a good turnout of producers at the congress

• There was significant discussion about the number of new finishers being built. There were several groups looking to purchase large quantities of early wean pigs on long term contracts. We had wondered to ourselves if the lower hog prices we are seeing now would dampen early wean pig demand. For what it is worth the discussions in Minnesota ended our wondering; demand is strong for good early weans on contracts. Indeed some observers wondered where the pigs were going to come from to fill all the new finishers being built.

• In regards to new sow barn construction we are being mightily challenged to find much currently happening. Part of it could be the winter construction season, but on the other hand it doesn’t seem to have stopped finishers being built.

• There was discussion about new sow barns being built yet this year. There are some in the works, but many still need to get financed and permitted. As the old saying goes, “talk is cheap“ Many hurdles have to be overcome including capital and courage.

• One observer whose job it is to know the national trends in production told us that he believes 90-100,000 new sow places will be built in the US in 2006. At that many sow places we expect little or no net sow herd expansion. Attrition in the industry will balance out the new sow barns. With a 6 million head US breeding herd a 1% annual infrastructure obsolescence is a loss of 60,000 sows of facilities per annum. 1 ½% is equal to 90,000 sow spaces

• One packer group expressed concern that live market weights were getting out of hand. Their customers (retailers, food service) don’t want nine inch loins. They want the cuts to fit the packaging. Cheap feed is driving weights higher. A packer’s only recourse is a grade system that rewards desired weights while punishing less desirable weights. The packer’s dilemma is the competition for producer’s hogs are intense and the producer’s have market options. The challenge, US packers are intensely competitive, there is little chance of collusion, an agreement to reign in weights will have to be driven by retail and foodservice demands, it will never be by the Packers. You can bet that you will never find all the packers sitting around a fire singing camp songs and roasting marshmallows. The competition between them is intense for it is a very tough business not conducive for the faint hearted.

• Many of the potential sow barns under discussion involve feed company management and participation. There appears to be a desire to generate early weans pigs to enhance feed demand. Many of the potential buyers of these pigs currently have sows. It is our understanding many will quit sows if the sow barn projects go ahead. Having sows is hard work- 24/7- sows wear down people and facilities. Finishing pigs is an easier play and over the last two years the finishers buying contracted early weans have made more per head relative to the sow barn owner. That is why some finishers have to invest to make new sow barn projects go ahead.

• An interesting dynamic at the Minnesota Pork Congress was the presence of an exhibit from Canada’s Manitoba Pork Council. The council was there to encourage dialogue between Canadian and American producers, and discuss the issues that there is common purpose and to help find resolve on the issues that divide. The Canadian exhibitors had mostly positive feedback. Remarkably the only dissenting voice was a former Canadian unhappy that he has a difficult time exporting his breeding stock to Canada. The Canadians exhibitors attended the Minnesota Pork Producers Annual Meeting and when introduced received a loud ovation. It was much appreciated. We understand the same Canadian group will exhibit at the Iowa Pork Congress this week in the hopes to foster further dialogue.

The Iowa Pork Congress

Consider attending the largest winter swine event the Iowa Pork Congress – January 25-26 Des Moines, Iowa- www.iowaporkcongress.org - Take the time to see what’s going on your industry. You have a big investment. Help protect it with knowledge garnered at the Pork Congress

Markets

Last week the US marketed 2.107 million hogs, a huge amount. The Iowa-Minnesota average lean price was $55.71 ($41.22 per pound live-weight) Considering the huge 2.107 million marketing, a price of $41.22 is quite positive. Iowa-Minnesota live-weights dropped 1.6 pounds (272.2) from the previous week’s record weights of 273.8. We expect weights will decline significantly again this week. We need to get under a 2 million head a week to get back over .60¢ lean. It should come by the first of February. The average of February to August lean hog futures Friday was 65.66 lean or $48.50 per pound live-weight. As the kills drops below 2 million we expect further strength not only in cash but lean hog futures.

“Most powerful is he who has himself in his power“ Lucious Amaesus Seneca. We are excited about the release of the Genesus video. If you have highspeed please take the time to view and learn more about us.

Source: Jim Long, Genesus Genetics / Keystone Pig Advancement Inc. - 23rd January 2006
Reproduced courtesy Farms.com