Pork Commentary: Swine Influenza

CANADA - This weeks North American Pork Commentary from Jim Long.
calendar icon 28 April 2009
clock icon 6 minute read

Just when we are starting to see the hog market move up, all of our lives are getting complicated by what has been termed “swine flu“. We are not sure where this will lead but every time swine flu is reported and tied to sick people it is in no shape or form positive for our industry – domestically or globally. Let’s hope the issue ends quickly for many reasons. In our opinion, it is the greatest barrier to 90 cent lean hogs.

Hog Prices Continue to Move Up

Last Friday Iowa – South Minnesota’s lean hog price averaged $62.60 up in the last 14 days $16.00 per head. This is up from last week’s $6.00 per head. It’s what we’ve got to have, price increases. Our industry continues to lose money with breakevens in the $70.00 lean range.

Other Observations

  • Last week’s USA hog marketings were 2.145 million head – 103,000 less than a year ago. Supply is definitely down and remains so.

  • We believe net breeding herd liquidation is continuing. There are people giving up every week voluntarily or involuntarily. We believe when producers do not have the courage to sell a sow and buy a gilt for equal money or better,it’s a reflection of most producers’ situations. This fact is confirmed in data indicating lower gilt retention. Such attitude will continue to fuel breeding herd decreases.

  • The USDA retail price of pork for March was 3.8 per cent higher than a year ago. Higher prices are indicative of higher demand (consumers are buying). Retailers averaged in March, $2.842 pound while pork cut-outs averaged less than 60¢ lb, which equals retailers are having a good time selling pork. As pork supply drops, this margin will narrow as competition will lower retailer margins. This is positive for hog prices.

  • We had visitors from South Korea last week. Market hogs there are bringing approximately $375 per head (225 pound) give or take $1.50 US a pound liveweight. We’ve got to believe our packers have the ability to buy hogs here and sell the pork in South Korea. The South Korean price is the result of sow liquidation and decreased numbers (approx. 15 per cent). Obviously South Korean consumers are paying high prices for pork despite the recession they too are in. Less pork always leads to higher prices.

  • USA pork in cold storage at the end of March was 593 million pounds, down 10 per cent from a year ago.
USDA March Cold Storage Report
(thousand pounds)
2008 2009
Chicken 764,765 634,700
Pork 657,344 593.197
Beef 426,708 422,457

Not only less pork but less chicken. Almost 200 million lbs less over year. This is positive.

USA Meat and Poultry Production
(Latest week available per million pounds)
Meat 2008 2009 Difference
Pork 533.7 517.9 -16
Beef 500.3 473.1 -27
Chicken 925.50 844.99 -70
Turkey 136.66 132.21 -4
Total 117

The trend continues and that’s why we remain bullish. That’s about 117 million pounds less meat and poultry in a week. It’s not just that we have less pork now and the conceivable future but it’s a huge amount – over a 1/3 pound less per week US population per capita.

What we see happening is less meat and poultry in storage. Less pork, beef, and poultry being produced. Domestic and Export demand are holding. Retail pork prices are higher than a year ago. One of these days very soon, this dog is going to hit the end of the chain. Hog prices fueled not only by less pork but all meats will lead to a price explosion. Not since 1975 have USA pork, beef, and poultry production have been down at one time. We have gained $16.00 per head in the last 2 weeks, and we expect prices to keep going far and beyond where lean hog futures are now. The only thing that might stop the train is the swine influenza situation dampening demand.

Swine Management Services

One of the keys to survival for everyone in the industry is productivity. Bench marking where we are is relevant and necessary. Swine Management Services (SMS) of Fremont Nebraska is the largest swine bench marking system in the world. In 2008 they bench marked 1,175,053 females on 585 farms. As you all know, we are in the Swine Genetic business and we work every day to make the best genetics to keep our customers competitive and profitable. With this in mind you can appreciate our happiness this past week when we received the SMS bench marking data for the calendar year 2008 for pigs /weaned/mated female year.

Swine Management Services - 1,175,053 females 2008

  1. Genesus customers had the number one herd
  2. Genesus customers had 4 of the top 5 herds
  3. Genesus customers had 8 of the top 9 herds
  4. Genesus customers had 15 of the top 20 herds

It is more than obvious that Genesus is dominating all of the competition in sow productivity. Every major genetic company has a large number of herds in this 1,175 million females database. The bottom line: our competitors are not keeping up. They claim and advertise prolificacy, but many are not delivering. Pretty pictures of sows and marketing claims don’t pay your bills. Real results do. We also have noticed many of our competitors do not show their proprietary genetic analysis from SMS. It’s available, they have it. Ask your genetic supplier. Maybe they are embarrassed but it’s your business and livelihood. Facts are facts.

One competitor told us “It’s not fair; Genesus always gets the best producers“. We agree, there are no better producers than our customers. Top producers make smart decisions.

Genesus Dominates Swine Management Services

Swine Management Services (SMS) of Fremont, Nebraska is the world's swine benchmarking service. SMS 2008 data was benchmarked on 585 farms with 1,175,053 females.

Genesus once again dominated results, 8 of top 10 farms were Genesus, 12 of the top 15 Genesus.

2008 - 52 weeks
1,175,053 females
No. of Farms 585 49
Top 10% Avg. 27.66 29.71
Average All 21.41 25.78

SMS Total 585 Farms - Genesus 8 of Top 10
SMS 52 weeks
1 1 Camrose 30.80
2 3 Riverview 29.82
3 4 Evergreen 29.54
4 5 Grand Colony 29.52
5 6 Woodland 29.49
6 7 Milltown 29.01
7 8 Fairhaven 28.95
8 9 New Haven South 28.95

All genetic companies are represented in this database of 1,175,053 females. The facts are indisputable; Genesus is the number one female. If you are not satisfied with your results, you should consider Genesus.

Further Reading

- You can view the Genesus SMS Genetic Report by clicking here.
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