Hog Outlook: New Antibiotics Policy Should Increase Feed Demand

by 5m Editor
16 December 2013, at 5:24am

US - The Food and Drug Administration announced that they are "implementing a plan to help phase out the use of medically important antimicrobials in food animals for food production purposes, such as to enhance growth or improve feed efficiency," write Ron Plain and Scott Brown.

The FDA's 11 December news release said "Once a manufacturer voluntarily makes these changes, its medically important antimicrobial drugs can no longer be used for production purposes, and their use to treat, control, or prevent diseases in animals will require veterinary oversight." This new policy on antibiotic use should decrease livestock and poultry feed conversion and thus increase feed demand. It should also drive up per head veterinary costs, especially for smaller operations.

USDA's December supply and demand estimates lowered their midpoint price forecast for the 2013 corn harvest by a dime to $4.40 per bushel. They raised their price forecast of soybean meal during the 2013-14 marketing year to $420/ton. USDA increased their forecast of pork production by 0.3 per cent for 2013 and by 0.6 per cent for 2014. They are now predicting 3.0 per cent more pork and chicken next year, 1.4 per cent more turkey, but 5.7 per cent less beef than in 2013. Total production of red meat and poultry is expected to be up 0.5 per cent in 2014.

Testing data from the National Animal Health Laboratory Network says that as of 1 December, the PED virus has been confirmed on 1,512 swine premises in 20 states. This is an increase of 140 locations and one state (Nebraska) from the week before. This was the largest weekly increase yet. There is an uncertain amount of double counting in this data.

Hog prices were steady this week. The national average negotiated carcass price for direct delivered hogs on the morning report today was $77.61/cwt, down 85 cents from seven days ago and down 95 cents from a year ago. The eastern corn belt averaged $77.63/cwt this morning. The western corn belt had a morning average of $77.46/cwt. There was no Iowa-Minnesota price quote this morning due to confidentiality rules associated with light volume. Peoria had a live price top this morning of $54/cwt as did Zumbrota, MN. Today's top price for interior Missouri live hogs was $56.50/cwt which was up $2.25 compare to a week ago.

Friday morning's pork cutout value based on mandatory price reporting was $86.54/cwt FOB plants, down 94 cents from the week before, but up $2.71 from a year ago. This morning's hog prices averaged 89.7 per cent of the cutout value.

Hog slaughter this week totaled 2.311 million head, down 0.4 per cent from the week before, but up 0.6 per cent compared to the same week last year. Hog slaughter weights in Iowa-Minnesota set a new record for the sixth consecutive week. The average barrow and gilt live weight in Iowa-Minnesota last week was 282.4 pounds, up 0.7 pounds from a week earlier and up 7.5 pounds from a year ago. The increase in weights has more than offset the decline in hog slaughter during the last few weeks.