When you look at the continental breeding herd year over year, there are 40,000 more. They called it 1% but it’s really closer to ½ of 1% more. More, but not much. Net expansion has been limited.

The number of market hogs is up 1% from a year ago. It’s up 640,000 head. If the market hog inventory is correct, the total hogs marketed per week will be up about 20,000 head per week over the next few months. That is Canada and USA combined. The key point is how many more will be slaughterd in the US and how many fewer in Canada. Year to date, Canada’s slaughter is down 3% while the US is up 2.3%. Year to date, both countries combined – up 1.4%.

If marketings are only up 20,000 head a week, supply will not undo pressure on US slaughter capacity. We are not sure that the stats are correct but let’s hope so. 20,000 more hogs a week would also not put big pressure on hog prices.

Canada-USA Sows Farrowed was up 30,000 more litters. There were 40,000 more sows. Not really a surprise to get this increase in litters relative to the sow increase.

The combined pig crop was up about 550,000 pigs which is up significantly. Up about 40,000 head a week. That’s a lot if those pigs make it to market. We better hope the exports kick in. China, you better come through. We expect they will.

When you look at the big picture ½ of 1% more sows and 20,000 more hogs a week.
If correct, prices will remain profitable.

The Canadian July 1st Inventory gives a good snapshot of the direction of the Canadian Industry.

The key number is the number of market hogs which are down 3% or about 350,000 head. It’s a sign of the continued push of small pigs (early weans and feeder pigs) to the USA, which is up approximately 10,000 head a week, year over year. The bottom line – you cannot keep taking the pigs away and not have fewer. From what we can see in the Canadian statistics, the 3% decrease (350,000 head) year over year is the largest decrease in annual numbers in the current database, which goes back to 2002. Obviously, there are over 350,000 finishing places sitting empty in Canada. They probably still exist, but no one wants to own the hogs to fill the space.

The Canadian breeding herd is down 1% (16,000 head). This reflects an industry treading water, as there is next to no new sow barns being built and most everyone is holding steady.

Markets

Lean hog prices are languishing. The Iowa-Minnesota price, last Friday, averaged 66.65, down 2.00 from the week before. US weekly marketings were 1.989 million last week, the week before 2.008 million. Same week last year, 1.960 million. The hogs keep coming. Inventory shows that there should be only 1.5% more, but US slaughter is running 2.7% higher than a year ago, since the first of July. We really hope that exports arrive on time as we have decreased (last Friday) October lean futures 66.65 and December 68.65 from their highs in the mid 70’s a couple weeks ago. You need blind faith when we have lean hogs now at 66.65 with 2 million hogs marketed, that we will have the same price in Oct-Dec with an expected 2.200 million hogs coming to market a week. We are not negative, but we are apprehensive.

A positive to support hog prices will come from the fewer cattle on feed August 1st. USDA reports a 5% decline year over year. 2006 – 10,822 million and 2007 – 10.299 million. Down 500,000 plus head, this trend indicates over 300 million fewer lbs of beef coming to market. Less total meat always helps all meat prices.

There are continued reports that Iowa-Minnesota finishing barn infrastructure is full to capacity with some barns being overstocked by up to double. We suspect what is happening is that the push to put small pigs in this region has outstripped barn capacity relative to seasonal supply. Some points:

• If we go from 2 million head to 2.2 million head a week marketings in the fall, obviously there should be more heads in the barns. If the finishing infrastructure is not full now, it never will be. Why have a barn not to use?
  
  
• When you look at Canada’s inventory, there are fewer market hogs but the pig crop is the same. What’s happening is that finishing spaces are empty in Canada with pigs going to USA (Iowa-Minnesota).
  
  
• We expect more finishing barns will be built in the Corn Belt over the next few months. It’s where the packing capacity is, farmers have equity to finance barns, and where you grow corn manure has real value (other areas its marginal). Also, sow barns which use little feed, situated in isolated areas are more conducive to higher health.
  
  
• Pigs are being pulled from North Carolina, Mississippi, Missouri, Colorado, Canada, Oklahoma, etc to where corn, packers and manure utilization is centered. This trend will continue. The question is how many finishers can be built in the corn belt in the next year and just as importantly who is going to own the pigs.

The latest Swine Management Service Benchmark (SMS) Data (Freemont, Nebraska) proves once again Genesus’ industry leading results. The SMS data base for the 12 months ending December 31 has a total of 380 farms and 722,417 females. In the last twelve months Genesus has 8 the TOP 9 farms in pigs weaned/ mated female/year (out of 380 farms). In the quarter ending December 31 Genesus has 6 of the TOP 9 farms in pigs weaned/mated female/year, and the first farm ever to exceed 30 pigs weaned per sow. Every major swine genetic company has numerous herds in the SMS database.

52 Week Performance ranked by Pigs weaned/Mated female/Year December 31, 2006 – 380 farms and 722,417 females

These facts confirm the obvious, Genesus out performs all other swine genetics. Ask yourself, are other genetic choices limiting your production?