Pork Commentary: Minnesota Pork Congress Report

CANADA - This week's North American Pork Commentary from Jim Long.
calendar icon 27 January 2009
clock icon 5 minute read

Last week we attended the Minnesota Pork Congress which was held in Minneapolis, Minnesota. Minnesota is the number three state for hog production after Iowa and North Carolina.

Our Observations

  • We talked to several hog producers. An apprehensive attitude is the best way to describe them. There has been lots of money lost. There appears to be no opportunity to lock in profits at current feed prices using lean hog futures. Cost of production is too high. Several people told us they need real profits this summer, breakeven will not be good enough for them to keep going.

  • Packers are also losing lots of money. You know it has to be bad when packers are selling pork for less than they are paying for hogs. Hard to believe that trend will continue but it is a testament to the ferocious competition between packers. They continually battle to maintain and enhance market share. The cost is huge. It’s a big boy battle – mano a mano. Anyone who believes there is collusion in the USA packer industry needs to look no further than what is happening now to realize there is no collusion.

  • The sow price compared to market hogs continues at an unprecedented premium. A packer buyer told us that in his almost three decades of purchasing sows he has never seen sows at such a premium.(about 20 cents a pound). The odds of this premium continuing are remote but Genesus has been involved in a couple of rapid de pop – re pops in the last few weeks as producers take advantage of the high sow prices to purchase a new gilt herd with a quite attractive revenue replacement cost scenario.

  • Last week in Minneapolis, Christ Novak, the new Chief Executive Officer of the National Pork Board introduced himself to us. He has been on the job since October 1st. Chris told us he has been travelling extensively to get an understanding of producer concerns and perspectives. He had read some of our less than glowing comments of the Pork Board. We had a forthright conversation. We reiterated our belief in the Check Off but also our concern as active participants in the industry that we had not been getting value for our check off dollars. Chris came across as a person who was looking for ways to provide the best return for our industry. He searched us out to talk when many would have walked past. We respect such initiative . This is our industry. We have everything, we own in it. We need, and want success. Chris Novak gave us hope that the Pork Board can evolve and adapt to the new demands and needs of the Pork Industry of 2009.

  • To have fewer market hogs year over year in the coming months we have to have fewer hogs in inventory now. Last week several feeder pig brokers told us of numerous barns that have no hogs. The same barns had hogs a year ago. No one we talked to has any scenario other than less hogs coming to market in the coming months.

  • We talked to several equipment, building, and financial people. There are no indications of any significant numbers of the new sow units in 2009. One broker flatly said they won’t happen. We see the same thing.

  • Want to get a headache? Try to figure out the different packers intentions of Country of Origin Labeling. We have heard many of them. We believe it’s a moving agenda when hog numbers drop to 1.9 to 1.95 million hogs a week. Early this May – June you can bet there will be greater flexibility then now being portrayed. Going back to Packer Competition and Market Share. It will make the others mental if one of them gets a leg up with full kills and margin advantage. They would hate one of them getting a $3.00 per head advantage.


Producers are apprehensive. Many need positive cash flow sooner rather than later. We did not hear anything in Minnesota that changes our belief in 90 cent hogs this June. There will be a lot fewer hogs – 90,000 fewer from Canada a week, year over year –less chicken, less beef, and less turkey. Total meat supply is declining year over year at an extraordinary amount. In Minneapolis we had several producers questioning whether we are delusional about 90 cent hogs. Everyone was expressing hope that it would happen.

This week we are at the Iowa Pork Congress. We will report our observations. Come visit us at the Genesus booth or come to the Genesus reception. Details below.

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