Markets

Last week hog prices gained some strength with Iowa-Minnesota’s average price last Friday averaging 66.56 up 2.50 from the Friday prior. U.S. hog slaughter for the week was 1.668 million lower than the week before due to the Memorial Holiday and 15,000 head higher than the same holiday week a year ago.

June lean hog futures closed Friday at 69.40, financial commitments in the futures indicating higher hog prices in the next few weeks. We agree with the futures as we see June slaughter days unnumbered by holidays. There will be seasonal decline in hog numbers for slaughter and no shortage of shackle space.

Other Observations

We still are not convinced that any significant new sow barn building is underway. Lots of talk, but not much cement poured. Could happen yet. Doesn’t appear to us much upside in the hog industry from ethanol production. It just seems to drive the corn price higher. Feeding ethanol by-product to swine doesn’t seem feasible at this time. Beef and Dairy cattle have the best opportunity for by product utilization. PWMS still seems to be causing significant mortality.

A person who attended PIC’s conference in Nashville two weeks ago tells us that veterinarians involved in the meeting explained there is no answers or solutions to this scourge. The PWMS menace hangs over people who got it and everyone who doesn’t. The problem isn’t conducive to industry bouyancy.

An e-mail from a reader this past week took us to task for saying farrow to finish operators are making $20-25 per head. This reader, a Canadian said he wasn’t sure he was making money at all. We explained the $20-25 per head was in the U.S. Midwest

The reader reflects the Canadian Producers dilemma. The appreciation of the Canadian dollar relative to the U.S. by over 30%, hog prices lower than the U.S. while most costs are higher. We suspect Canadian Producers are trading dollars just either side of breakeven. It’s a tough situation with U.S. producers making $20-25 per head; obviously Canadian producers will lag behind financially. We expect a contraction in Canada’s sow inventory and market inventory over the coming months. Currently the number of new sow units under construction in Canada is miniscule. It goes without saying that if you build nothing new production will start going backwards as there is nothing to replace the operations that invariable go out of production for whatever reason every year.

If you get an opportunity read an interview in the May issue of National Hog Farmer (www.nationalhogfarmer.com) conducted by Dale Miller with Ken Prusa Professor at Iowa’s State specializing in pork qualities. Ken Prusa recognizes the struggle that the pork industry has had with static per capita pork consumption. Prusa puts forward some thoughtful ideas on where to look for solutions. “Instead of looking at consumption trends we might look at value trends.

Some of the biggest retailers tell us they want a three tiered program for pork- much like they have with beef and chickens. Prusa believes “There is great potential for increasing value through pH-selected and color selected products“. Maybe the greatest challenge we have as an industry has been our inability to grow domestic per capita consumption and demand. Ken Prusa has some ideas take a look at the article in the May National Hog Farmer. The dialogue to where to take our industry needs to be engaged.

Source: Jim Long, Genesus Genetics / Keystone Pig Advancement Inc. - 5th June 2006
Reproduced courtesy Farms.com