Iowa-Minnesota lean hog prices moved higher last week to 79.07 up from the previous Friday’s 76.80. Lean hog futures through the next 14 months continue to show historically high strength with the summer months of 2009 exceeding 90¢ lean. The futures market continues to expect lower supply and greater demand and it is correct but in our estimation the future markets this summer and next year have considerable upside. Why?

• In the coming weeks we expect to see hog slaughter fall. Weights are declining at about one lb a week clip and this is with temperatures considerably below normal. Last week, US hog slaughter was 2.194 million, approximately 5% greater than last year’s same week’s 1.989 million. In our opinion, a 1 lb decline in weights with temperatures we have experienced is equivalent to pulling hogs ahead 5% on the week. Even if we are out a bit when weekly slaughter moves every closer to the same year over year after running 10% greater year to date this will be a great psychological boost to the marketplace. How soon do we get to near 0% year over year? When will the liquidation of sows take us below year over year? It’s coming, not if but when.
  
• Canadian Swine Exports to the US have stalled. Year to date they are 19.5% greater. The last week we have data, 2/10 of 1%. The huge liquidation that has happened in the Canadian sow herd is kicking in. You cannot send pigs that do not exist.
  
• Sow slaughter is still 10% over a year ago. The actual is higher. The Canadian government sow cull program is rendering most of the sows. They are not in the slaughter statistics (the latest Canadian government sow cull is 100,000 registered). We believe Canada and US breeding herd combined is decreasing at a clip of 5,000 to 10,000 sows a week. There is no way that there will not be fewer pigs going forward.
  
• Fewer North American pigs in 2009, fewer pigs in the world as global liquidation continues. Coupled with cutbacks in US chick placements (-2.25%). Greater US cow slaughter (YTD +6.5%). There will be less total meat production. Prices will be stronger. 90¢ next summer is obviously higher than now. We expect its way short. The only way to ration supply is price $130 barrel of oil, case in point.

US Cold Storage

The USDA April 30 inventory of pork in cold storage was 652.2 million lbs up about 130 million lbs from a year ago. 130 million lbs is an increase of 2 days of US pork slaughter being stored. Total storage is about 7 days of pork production. More, but not a daunting number as supply decreases and prices increase; this inventory will decline with little effect on prices. We have all heard and read about pork exports being limited by refrigerated containers. Like all problems, there will be solutions as container companies will increase supply for the reason of profits. US pork exports will continue to grow as European supply declines. High feed prices are hurting all Canada USA producers, but relatively less than others in the world.

Manitoba Government Proposes Draconian Legislation

The socialist, urban-based government of Manitoba is proposing a law that will stop the building of hog facilities in much of the province. Manitoba, arguably the most dynamic and competitive hog region of Canada, is facing draconian legislation (Bill 17). Under the premise of environmental and health concerns, the province wishes to render the Manitoba industry ‘impotent’. This in a province challenged to attract many outside industries with little natural resources other than the work ethic, perseverance and entrepreneurial spirit of the residents. This is a province where the major city, Winnipeg has dumped millions of gallons of sewage into the rivers with little consequence and poured sewage on frozen snow-covered fields. Instead of dealing with the crime of urban effluent discharge, the red herring of unsubstantiated charges against hog producers.

How foolish. Never has there been more value put on manure. Fertilizer prices through the roof are making farmers’ manure value maximizers. Manure is worth $100 plus an acre. Only government navel gazers could not realize the economic reality of proper manure utilization. More than that it’s part of natural cycle of life and forces our society from using $130 barrel oil to make fertilizer. Nothing is greener than natural fertilizer.

In fact, we wonder if there is not a more twisted reason. The large bulk of Manitoba’s hog producers are people of Mennonite and Hutterite faith. They have been successful and have expanded.

The large bulk of the land being banned from new hog production is in a circle around the city of Winnipeg, population 700,000. There has been concern that Hutterites purchase large blocks of land and like Mennonites, have their own culture. Many, if not all Hutterites and Mennonites are in hog production. Both groups came to Manitoba to avoid real persecution and prejudice. They were promised protection, freedom and the right to commerce. Due to the religious beliefs both Hutterites and Mennonites are conservative by nature and do not have a socialist bent. It’s also interesting, the only form of animal production facing a law banning new facilities is hogs (manure from all other species must be different). This law will effectively push the Mennonites and Hutterites away from Winnipeg. Is it environmental law or segregation to form hog producing ghettos? Is this law about the environment or calculated to suppress the financial vitality of people of Mennonite and Hutterite faith? Something smells and it’s not manure. It’s a government wrong for all too many reasons.

Genesus Dominates Swine Management Services
2007 – 52 weeks Summary

Swine Management Services (SMS) of Fremont, Nebraska is the world’s swine benchmarking service. SMS 2007 data was benchmarked on 467 farms with 901,764 females.

Genesus once again dominated results, 8 of top 10 farms were Genesus, 12 of the top 15 Genesus. Genesus had the only two farms over 30.