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Pork Commentary: Those Pigs Just Keep Coming and Coming!

by 5m Editor
24 October 2007, at 11:03am

CANADA - This weeks North American Pork Commentary from Jim Long.

The last three weeks have had the largest three week hog marketings ever! They just keep coming and coming. Last week was 2.334 million – 6% more than the same week a year ago. Lean hog prices are holding up remarkably well, with Iowa-Minnesota last Friday at 55.43. US lean cut-outs 62.08 showing remarkable resiliency in the face of this historical deluge.

Observations

  • Iowa-Minnesota weights two weeks ago were 267.9 lbs, a drop from the previous weeks 268.1. Though not much of a change, this is counter-seasonal. If Iowa-Minnesota weights show no increase in this week’s report, it would be an indication that hogs have been pulled ahead. That would be real positive.

  • There appears to be significant evidence that the circo-virus vaccine given to small pigs is working. Not only lower mortality but less morbidity and better growth. This is the expansion in hog numbers we are seeing coming to market. We better get more finishers built to handle future production.

  • Talking to a packer executive this week, he walked us through current packer capacity. It would be fair to say his scenarios indicate enough US shackle space to handle all hogs this fall without a crisis.

  • We are picking up from several packers that they are seeing increased export activity. This is saving our bacon in prices. The US dollar devaluation (down 30% on the Euro) is making US pork quite inexpensive for many buyers. Especially for those Asian countries with record hog prices.

  • Spot market feeder pigs and early weans are under extreme price pressure. High feed, low cash prices and lack of finishing spaces is hurting demand. Some spot sews have been reported to be under $10 each. It appears quantity, genetics and health are becoming an even greater sorter of little pig buyer demand. The good news is 2.30 million plus of market hogs a week is making space. There is no way four to six months from now that many a week will be going to slaughter. The infrastructure has been maxed but now it is being emptied faster than it is being filled. As the seasonal supply of small pigs declines, prices will rebound. Supply-Demand – not a real science, is it?

  • Got to feel sorry for the hog producers in Eastern Canada. There are many days they are receiving just over 30¢ lb US liveweight (90¢ kilo). Manitoba producers are receiving $15.00 more a head. The difference is packer competition and marketing ability. Manitoba producers can sell to the highest bidder. In Ontario, producers have their marketing controlled by the monopolistic Ontario Pork Producers Marketing Board. $15.00 a head difference? Ontario has the lowest hog prices in the world. A broken marketing system breaking producers. There will be fewer hogs from Ontario in the future, as the industry contracts.

  • The ethanol push has certainly driven up feed prices. Last week, the Alberta provincial government in Canada announced $170 million in funding to level the field for livestock producers. If society wishes to produce ethanol for environmental reasons, it is unjust that this cost should be downloaded on livestock producers. It is not right and not fair. It should be society’s cost. This is the first move by government to alleviate the financial crush that has been inflicted on livestock producers. All governments should step up.

  • Monsanto has sold its swine genetic business to Newsham. In a way, all swine genetic companies are relieved. If Monsanto had ever unleashed all its financial resources, they would have been a formidable foe. No swine genetic company has the capacity like Monsanto has, with profits well over a billion dollars a year.

Summary

Market prices are low. It’s not an inspiring time, with just about all producers losing money. Unfortunately, you cannot control prices. You cannot control feed prices. You cannot control almost all of your costs. We are mostly price and cost takers. The main thing you can control is your attitude. Prices are down, but you cannot afford to be down. Everyone in your organization looks to you for leadership. Be positive. Look for items that can incrementally lower costs and improve productivity. At the Leaman Conference, Mark Greenwood of AgStar showed profit results of farms varying in 2006 as much as $22.00 per head. The difference will be management - people making the right decisions on genetics, nutrition, health and the ability to lead people. Be a leader, be positive.

“Carpe Diem.” – Seize the day
-----Horace

Smith Century Farms

Noah, Koryn, Myron and Jake Smith
Todd Kruger

“We have about 2300 sows in our system at Smith Century Farms. We run custom nurseries and finishers on various sites. These producers have commented they like the way these Genesus pigs grow and handle.

Our Tyson buyer tells me we are in the top 5% of the hogs he buys. Our results at Tyson to date on 11,665 head of hogs are 55.95% lean with .70 BF and 2.85 Loin Depth on a 270 lb average pig.”

Myron Smith –
Smith Century Farms

Kruger Hog Farm

“Since changing to Genesus Genetics we’ve seen an improvement in our gain and feed efficiency over the our other line we had.

In discussion with our packer, Swift, indicated we were the No. 1 herd for Percent Lean the first six months of 2007 at the Worthington Plant.

Those results are 7896 head at 260 lb with 76.2% yield, 56.5 Lean, and 4.28 premium.”

Todd Kruger –
Kruger Hog Farm

5m Editor