Our report:

• Conference was well attended with registrants over 800. A record number.
  
  
• The Kalahari Resort with its waterpark and other family activities appears to be a magnet for many attendees to bring their families for a mini – vacation. The Wisconsin Dells has many family activities and claims to be the Waterpark Capital of the world.
  
  
• The conference was well organized with all meals and talks run efficiently and on time.
  
  
• Genesus was a major sponsor of the conference. On the Sunday night Genesus hosted a reception with over 300 attendees. In the breakout sessions we spoke on our perspective on Global Swine Markets and how they are affecting the US market. Robert Kemp PHD Genesus Vice President gave a genetic update on Genesus R & D projects.
  
  
• Like all conferences some speakers were stronger than others. Someday we would hope more people who actually own and run swine operations get to speak. Too many conferences have experts telling us what we should do but few of these speakers have their own skin in the game. There are great entrepreneurial success stories in our industry, they are real and inspirational. I remember hearing Mr. Bill Prestage – Heritage Farms speak at the Michigan Pork Congress 25 years ago. We got lots out of that and obviously we still remember.
  
  
• We have to mention the mood of attendees – Excellent! $100 per head profits, the best ever has certainly been great for attitude.
  
  
• Talking to many attendees and listening to speakers all see the US corn and soybean crop in great shape. One speaker, Joe Kern expressed the opinion that corn could go as low as $2.50 a bushel and soymeal $250 per ton. A long way from the $7.00 a bushel corn we had a year ago. The potential of further collapse of corn and soymeal prices will be extremely enhancing for hog profit margins.
  
  
• It appears to us that PED is slowing down. We don’t hear antidotal reports from our salesmen for the last two plus months. A leading swine vet from Minnesota told the conference that their swine vet clinic of 11 vets has not seen a new PED break since mid-April. If PED has slowed down in May and beyond it is likely US hog marketings could be close to a year ago November on. Wildcard will cool weather in the fall and winter lead to an expansion of new breaks. We expect there will be far fewer pig losses from PED going forward.
  
  
• The vet in charge of USDA’s new PED mandatory reporting spoke at the conference. Our sense most producers don’t trust the USDA in the way they were looking at him when he spoke. We expect PED will not be reported to a full extent going forward. At this point USDA is not sure how PED got to the US. He thinks maybe a human nasal passage?
  
  
• There were speakers at the conference on how to get to 40 pigs a year. It’s a big push to get there, you need the 24/7 execution of basics from a dedicated workforce and the genetics capacity. Genesus customer Rosedale Farming Co. Ltd topped Swine Marketing Systems 1,277,500 females with 41.1 total born per mated female per year for calendar year 2013. That’s over 40 and it’s the No.1 herd out of over a million females.
  
  
• We sense from the conference there are efforts to expand the sow herd. We are being approached and were in discussions at the conference with people wishing to fill existing sow units and build new ones. Not much happening yet but there are efforts underway. We believe as we wrote several times before. Sow herd expansion has been next to non – existent. Reasons: Equity hole, labor issues, PED not only lost pigs but when in crisis it’s hard to be expanding! Many problems in the first 6 months this year’s profits were limited due to hedging plus they had margin calls. Also, in new sow units, banks are looking for up to 60 per cent real equity in financing. All above keeping a lid on expansion.
  
  
• Last week we wrote about the huge sow herd liquidation in China due to financial losses per head of up to $80. This past week China released new inventory numbers. The sow herd has dropped 8.2 per cent in the past year (4 million sows) and market inventory down 4.8 per cent (21 million hogs). It will take a while to get the full impact of the liquidation with about 1.5 million sows of the 4 million sows taken out in April – May. When it does kick in farmer arithmetic 4 million sown times 13 hogs per sow per year = 52 million market hogs. About one million hogs less per week half of US weekly production. Let’s assume the US could capture 10 – 20 per cent of the market hog shortfall. That’s the equivalent of 100,000 – 200, 000 hogs per week for export. Market Game Changer. About the time PED slows down in the US and production is coming back we expect China exports to be real strong. This is the floor to US prices.

Some China numbers relative to US.

If you look at costs, productivity, and market prices. Feed. While the US industry at 97 cents a pound can make $100 per head, China feed costs are about $100 head more and productivity less. US industry at 97 per pound have its greatest profits in history while China losses money at the same price. When China’s 4 million sow liquidation kicks in, China’s hog price will soar and pull US pork. Chinese interests didn’t buy Smithfield Foods to produce pork for the US consumer only. China’s interests purchase of Smithfield also goes a long way to insuring market access for US pork.

Summary

National Pork Industry Conference was well attended, well organized, and we learned a lot. We see the beginning of sow herd expansion, PED has slowed down at least for now. Exports to China are the game changer late 2014 – 2015.