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Pork Commentary: SEW’s Price Increase

by 5m Editor
25 November 2008, at 10:39am

CANADA - This week's North American Pork Commentary from Jim Long.

A real barometer where the hog market is going are SEW and feeder pig prices. In the middle of July this past summer, the average cash SEW pig was $5.00. Since then according to the USDA the average cash SEW has been as of three weeks ago, $31.06, two weeks ago $35.55, and last week, $39.74. A rapidly ascending market is a reflection of supply and demand.

Lower feed prices - December feed corn closed Friday at $3.38/bushel, a new contract low.

Fewer pigs available due to breeding herd liquidation is pushing markets higher. We expect average cash SEW’s to be $50.00 plus in January. That’s a long way from $5.00 in July, an indication of the volatility of our industry, it’s becoming our turn. We have had our recession.

The hog cycle is alive and well. High prices make low prices. Low prices make high prices.

Every time we hear “This time will be different“ we laugh. Ask the oil industry or corn growers. We all produce commodities and slight changes in supply and demand can alter prices dramatically up or down.

Total Meat Production

After months upon months of increased pork, poultry, and beef production the tide is turning. A week ago the U.S. produced 85 million fewer pounds of total meat then the same week a year ago. That’s about 2600 fewer tractor trailer loads of total meat year over year. Less supply will help prices. Last week lean hogs were 10% higher than the same week last year. Chicken prices are up 7% year over year. Beef was down -1.4% despite 5% less beef production. A reflection possibly, of pork less than half the price of beef. Price points do matter when consumer’s disposable income is being challenged as it is in this economy.

Our premise is the Americans meat demand will hold in a softer economy but they will watch what meat they will buy. Reports of lower restaurant sales will hit beef much harder than pork. Pork has a bigger share of at home meals then beef. Not always an advantage, but maybe in this time frame.

Check Off

Last week we wrote about the USDA’s move to canvass pork producers on whether there should be a vote on mandatory check off. We received an interesting email from one of our readers. The story goes like this. Our reader, an implementation advocate for the mandatory check off in the 1980’s was at a pork producers banquet just after check off was made mandatory. At the banquet, a guest speaker was Roland “Pig“ Paul, a legendary founder, organizer, and NPPC head. We quote our reader: “After the banquet, he and I were visiting and I said to him ‘I bet you are happy about the outcome of the vote.’ Pig Paul replied “You guys just lost the power to voice your opinion on policy. Requesting your check off money back was the only way to have your voice heard at the state and national level.“

The National Pork Board has just appointed a new CEO. His name is Chris Novak. We only hope he has the vision to shake up the entrenched bureaucracy that has become less than zealous in advocating and promoting the Pork Industry. Maybe he even has the guts to provide the leadership to get rid of the loser “Other White Meat“ program. We are hopeful. It’s a year of hope and change. Pork Producers have invested a billion dollars in check off in the last 2 decades. It’s up to Mr. Novak to remind the bureaucrats and board members who they work for.

Other Items

Last week we were in Alberta and Montana visiting producers and speaking at three different venues. There, like everywhere else, producers have hit the end of the rope. There is little optimism. Financial losses are weighing on everyone. The point is there is no magical spot anywhere in the world where financial losses have not taken a toll.

In Montana, we had the honor to present Camrose Colony the award for Genesus Duroc Boar and Female Customer of the year. The first farm in the United States to exceed 30 pigs weaned per year. When we first called Camrose and told them they were the first U.S. farm to exceed 30, they didn’t believe it. Camrose thought there were many farms over 30. After we persisted, they were still surprised! As they said “We don’t do anything special, we just go to the barn everyday and do what has to be done.“ That is so true. Repetition every day of basic details. Discipline. It is simple, but it is hard to execute everyday, 52 weeks a year. Congratulations!

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Camrose Presented Genesus Award for 31 pigs

Also last week we were involved in our first Webinar organized by Jim Lease JBS United. It was sponsored by JBS United, Elanco, Pfizer, and Zinpro. There were several speakers and there were approximately 1000 attendees at several locations across the United States and Canada. We gave our talk, which to our surprise; surprise was more bullish than others. This included us predicting prices reaching 90 cents plus lean hogs this summer. Afterwards in the question and answer period, there was an observation that we should have a meeting with Mark Greenwood, Vice President of AgStar Bank, also a speaker and fight it out as to who is right. Mark is not as bullish. Mark then offered to buy me a drink at World Pork Expo if I was right. I replied “Mark you better bring your money.“

As Mark later said he hopes for 90 cents plus lean. He, like everyone else, knows the pain our industry has experienced. Yes the bet was in jest, but this industry is having no fun. We need higher prices and reasonable feed prices. We stand by our opinion of reaching 90 cents plus lean hogs this summer.

Recently at Awards Banquet in Great Falls, Montana Martin Waldner and Phillip Kleinsasser from Camrose Colony were presented with the Genesus Trophy for top production. This for achieving 31 pigs weaned per sow in a calendar year. The first farm in the United States to ever exceed 30 pigs per sow. Camrose uses Genesus Duroc and Genesus F1 gilts. We congratulate Camrose for this outstanding achievement.

Average pigs born alive/litter 12.9
Litters/mated female/year 2.54
Pigs weaned per sow 12.2
Adjusted 21 day litter weight (lbs) 164.0
Average age at weaning 20.8
Pigs weaned/lifetime female 52.0
Pigs weaned/mated female/year 31.0