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Pork Commentary: Earthquake - Market Mover

by 5m Editor
15 March 2011, at 8:50am

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

The earthquake in Japan last week helped push May corn down 36 ¾ cents a bushel and May soybeans down 79 ½ cents a bushel. Japan is the US’s largest corn customer and buys 30 per cent of the US pork exports. The fact that Japan is such a major customer of US pork was seen with Friday’s June lean hogs off 1.95 to 99.650.

The tragedy in Japan and the quick effect it has had on the US grain and pork market indicates the interdependence of much of our global economy including pork. For a couple months the US pork industry has been supported by the devastating foot and mouth outbreak in South Korea. Now the question short term will be port facilities in Japan been damaged too much to import grain? What has happened to the Japanese swine farms? Pork storage? and Packing plants? Will the damage lead to less or more pork being imported? We have lots of questions but no answers. We do suspect Japan has the resources and capacity to recover quickly.

Sometimes we observe world events and we are discouraged. In these circumstances we found it more personal. We have significant swine genetic business with the major Japanese swine producer. With that business relationship has come personal knowledge and friendship with our Japanese colleagues. When we heard of the crisis, we were concerned for their family’s safety. Fortunately they are safe. The earthquake was so far away however it affects our industry and our personal lives.

Other Observations

  • Fed Cattle prices are strong around $1.17 live weight a pound. Such high prices make pork in the stores look like a bargain. With fed cattle futures averaging almost $1.20 live weight per pound for the next year we see this as only to price supporting for hogs.

  • Chicken broiler egg sets and chick placements continue to run almost the same as a year ago. Composite average broilers 12 city is averaging 80.67 per pound compared to 82.59 per pound a year ago. We all know feed is a lot more expensive this year compared to last. We can’t see how the chicken price relative to feed cost is going to head to chicken expansion.

  • Reports on the foot and mouth in South Korea are now estimating pork production is down 33 per cent to the lowest point in twenty years. It will take a minimum two years to recover in the meantime more pork will be imported. About 5 million hogs per year equivalency will need to be replaced. Most of the imported pork will come from USA-Canada.

National Pork Board

We had some negative feedback last week from some readers who do not like our support for the new pork slogan Pork: Be Inspired. We listened but we did not change our mind. The slogan itself is not as important to us as the direction of the Pork Board. The new slogan tells us instead of putting their head in the sand we lost market shares for twenty years there is a plan to fight back. Getting pork eaters to eat more is strategic. For the first time ever there is a target to increase pork consumption 10 per cent. 10 per cent more can be reached with regular pork eaters consuming one more pork meal a month and intermittent eaters twice more per year. It is a target. It is a plan. Something we don’t believe there ever was before. We don’t know if it will work, nobody does but sitting back and watching us lose market share is an option we don’t like the most. Consequently we support the National Pork Board its CEO Chris Novak, its directors and its staff. For the first time in a generation our check off dollars are being used for a plan to increase market share.