ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Pork Commentary: Darkest Before the Dawn

by 5m Editor
2 December 2008, at 11:25am

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

There is a saying that it is always “Darkest before the dawn.” We believe the hog industry, after months of darkness (losing money), is about to see the dawn of an up market. The fundamentals of a lower hog supply are upon us. The only way to ration a shrinking supply is higher prices. Couple this with a large decline in cattle, chicken and turkey production. It will be “Happy days are here again”, but not a second too soon for many producers.

The ruthlessness of the high feed prices of the last year and a half has broken the spirit of many producers. Many are scarred with lines of credit extended to the breaking point. Faith in the future is shaken. Relentless 24 hours a day cable news networks inundate us with wall to wall negative news about what is wrong with us, our economy and our society. Thankfully, most of us have the sense to shut off the meat puppets that tell us how businesses should be run, when these clowns never have run a business in their lives. Were these not the same wizards who told us $200 barrel oil was coming and $10 bushel corn? They don’t know where the economy is going. Never have and never will. Believe in your own counsel.

Other Observations

Isowean – SEW prices continue to climb from a cash average of $5.00 each in mid July to $43.90 last week. Some sew groups are already trading over $50.00 and we expect the weekly U.S.D.A. cash average to surpass $50.00 in the next few weeks. These current Isowean pigs are May-June market hogs. The rapid price increase is because that is what it takes to buy them as pig supply rapidly declines.

Pork Check Off

Had a reader call us last week who called the National Pork Board office about per capita pork consumption. He reported, when he asked one of the bureaucrats why per capita pork consumption was not increasing, he was told, “It’s because more pork has not been available to increase the consumption.” If you are confused, join the club. We guess it means the failure of the lack of per capita pork consumption gains over the twenty years of check off (a billion dollars) is not the lame Other White Meat Program, but the failure of us producers to produce more pork. Be damned if we go broke doing it because of lack of demand. It’s amazing! Where do they find these people? There will be a U.S.D.A. vote on the pork check off. With this type of convoluted reasoning, the bureaucrats better dust off their resumes. They have no future.

Pork Cut-outs

The desire to build new sow units is very limited. There is little construction and little ongoing quoting. It is slow. The current lending scenario will make it even more difficult to get financing for new sow units going forward, which is long-term price supportive.

A reflection of breeding stock demand is the boars and gilts exported from all of Canada to the United States. In the first 10 months of 2007, 87 thousand. In the first 10 months of 2008, 36 thousand. Less than half year over year. Fewer gilts have gone into barns everywhere. Sows have been held for more parities. Inventories in individual sow herds have declined. All and all, lower breeding stock sales. We expect a pent up demand for gilt replacements hitting the marketplace in the coming months, but in the meantime, the lower breeding stock sales are a sign of fewer market hogs coming.

Markets

Last Friday Iowa-Minnesota’s lean price averaged 53.76¢ a lb – up almost 3¢ a lb from the previous Friday. We expect the lean hog price to rise steadily to 70¢ lean in February and then move to 90¢ plus in the summer months.