What's new on National Hog Farmer?
- Special
Report from the 39th Swine Veterinarians Meeting
- 44
Practical Ideas to Cut Feed and Production Costs
- Free Gilt
Selection Posters Now Available for Download
- Special Section: Green
Farming Practices
- Current Issue:
Managing Feed Costs
NationalHogFarmer.com
|
About This Newsletter
|
Send Comments & Questions To
Dale Miller, Editor,
National Hog Farmer
To unsubscribe from this newsletter go to: Unsubscribe
To subscribe to this newsletter, go to: Subscribe
|
|
Market Preview
Bubble Bursting or Just a
Leak?
Was that the sound of a bubble bursting – or was it
just the sound of a leak? Regardless, the price moves of the past two
weeks have provided some hope for cost-challenged livestock producers.
By all accounts, the driver of this sell-off is the failure last week of
Bear Stearns and the losses being faced by many investment funds in
mortgage-backed securities. Some of those same funds also had
positions in commodities futures and apparently most of those were long
positions. Liquidation of those long positions is, according to the
trade, the major driver of the downturn in prices. The fickleness of
the Dow Jones Industrial Average this week is evidence of both
uncertainty and the extreme measures that are being tried in an attempt
to allay it.
In addition to the uncertainty in the broader market, it appears that
the news from South America points more and more to good crops. The
potential fly in that ointment is wet conditions in many parts of
Brazil. The harvest there was delayed by late planting, so it does not
appear that the conditions are of much concern, yet. USDA has pegged
Brazil’s crop at a record 61 million metric tons (MMT). When
combined with Argentina’s projected 47 MMT crop, this will leave the
South American supply of 108 MMT, 0.5 MMT larger than last year.
Finally, the drought in Southeastern states has lessened in both area
and severity in recent weeks. To see this change, go to the Drought
Monitor homepage drought.unl.edu/dm/monitor.html
and click on 12-week animation.
Corn, Soybean Futures
Figure 1 shows the break in December Corn futures. The chart is
representative of all of the other months. Corn futures dropped 60-70
cents/bu. across the board and broke an up trending support line in the
December chart that dates back to the passage of the energy bill back in
December. That bill raised the mandate for corn-based ethanol to 15
billion gallons in 2015. Many feel that it is the impetus for the
latest run-up in both corn and soybean prices.
Figure 2 shows a similar chart for December soybean meal. It, too,
looks like all of the other current meal futures chart. This one shows
that the up trending support line dating to December was actually broken
on Feb. 29. This week’s sell-off added further credence to the
reversal by covering a gap at $307.50 and breaking through support at
the bottom of that gap. The next technical objectives for this chart
would be the top and bottom of last fall’s trading channel at about
$268/ton and $249/ton.
Figure 3 puts these price declines into a feed price perspective. The
declines of futures prices this week have knocked $20-25/ton off the
cost of corn and soybean meal to make a 16% crude protein diet.
Assuming that is representative of all of the feed fed to a finished pig
(and I think it is), this would reduce feed costs by $7.50 to
$9.40/head. That’s the equivalent of a $3.75 to $4.70/cwt. carcass
rally in Lean Hogs Futures.
What’s the Plan?
So, what should you be doing? Remember my past admonition to play
defense this year. When an opportunity arises to take a substantial
amount off the cost of a finished pig – and $7-9/head appears to me to
be substantial – you should take action.
Is now the time to cover your needs in futures? Perhaps. But this
week’s break is at least a sign that you and your banker should be
ready to pull the trigger on feed needs for this summer and, perhaps,
next year. I do not know if prices have fallen as far as they are going
to fall, but any sign of a bottom would, to me, be a sign to cover some
feed needs. And, if you are wrong, you are still far better off than
you would have been just one week ago!
The better strategy may be to buy out of the money call options. The
strike price that you can secure for a given premium has declined along
with the futures market, so you can put a cost ceiling at a much lower
level ($7-9/head) than you could just one week ago. The beauty of calls
is that they leave the bottom side open and do not require margin – a
feature that might be particularly appealing given the tight liquidity
position that many producers face. The devil of calls, of course, is
that they are a straight cash outlay and, in the case of deferred
contracts, not an insignificant outlay due to the time value of the call
option.
Regardless of how the markets have treated you lately, take some time
this weekend to enjoy the Easter holiday with family and friends. May I
suggest a nice Easter ham to celebrate? Tradition, great flavor and an
assist in decreasing cold storage stocks – that’s a nice trifecta, I
think.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
 Hermitage NGT
Hermitage NGT offers their North American clients:
- Breeding Stock (GGP/GP/Parent stock)
- Semen-fresh & frozen
- Closed herd breeding programs
- Genetic monitoring through the Hermitage BLUP recording system
Talk with our team of specialists in genetics, reproductive physiology,
nutrition, veterinary medicine, pig production management and A.I. to
design a program to allow you to take advantage of these exciting
genetics.
www.hermitagengt.com
Production Preview
Focus on Efficiency
With high feed costs and no relief in sight, now more
than ever, feed efficiency is a priority. If you are looking for ways to
reduce production costs, improving feed efficiency is a good place to
start. The four primary areas of opportunity associated with feed
efficiency are genetics, nutrition, feeding behavior and feeder
adjustments. Let’s discuss each briefly:
Genetics
Feed costs typically represent over half of the total farrow-to-finish
production costs, and more than two-thirds of wean-to-finish total
costs, so the emphasis on feed efficiency has been important for years.
As an example, since 1972, PIC records indicate an improvement of 14.5%
in feed consumption and 31.6% in feed-to-gain ratio, while increasing
slaughter weight by 25% and the carcass lean percentage by about 22%.
Other genetic suppliers have made similar genetic gains. These
achievements are a testament to the industry’s focus on improving feed
efficiency.
Still, improved throughput with decreased cost per pound marketed is
rarely optimized with single-trait selection. Feed efficiency must be
balanced with other important production traits.
Nutrition
Energy added to the diet will help improve feed efficiency, as will
certain feed additives. Watch feed budgets to make sure nutrients are
maximized effectively at the proper pig weights.
Particle size is important to maximize feed efficiency and should be
monitored at all times. As particle size is reduced, digestibility of
the diet improves and so does feed efficiency. The ideal range for
particle size is 650 to 750 microns. Particle size below 650 can cause
feed to bridge in bulk bins and increases energy costs at the feed mill.
In addition, a smaller micron size can cause ulcers in the pigs.
On the other hand, Kansas State University research says a too-large
particle size will cost $0.65/pig for each 100 microns higher than 750
microns because of poor feed efficiency.
Feeding Behavior
A correlation has been found between feed efficiency and feeding
behavior. A recent trial at PIC looked at seven feeding behaviors –
number of visits, feed intake/visit, feed intake/day, time spent at the
feeder/visit; time spent at the feeder/day, and how fast the pig ate
during each visit. These traits were studied individually and together
using principal components.
According to PIC’s Casey Neill, technical service manager and David
Casey, geneticist, individually, the number of visits and the time per
day had a moderate effect on feed conversion. “The largest principal
component has a strong correlation with feed conversion and separated
the pigs into two groups – meal eaters and snackers,” say Neill and
Casey. “Results showed that meal eaters – pigs that came to the
feeder and ate their fill in fewer visits – were more efficient and,
as a result, had lower feed conversion than snackers. Although these
feeding behavior differences will contribute to the line differences in
feed efficiency, other factors, such as leanness, will impact feed
efficiency differences.”
Feeder adjustments
Feed costs represent about three-fourths of the total production costs
to produce a market hog, so maximizing feed efficiency is even more
imperative in the grow-finish phase.
One of the most immediate ways to improve feed efficiency is with feeder
adjustments aimed at reducing feed wastage. Wasted feed that ends up in
the pit can cause more problems with nutrient management when manure is
applied to fields. Train employees to be aware of proper feeder
adjustments. At least 75% of the pan should be open and the feeder
opening should only be finger thick. Post pictures of good and poor
feeder adjustments in a prominent location so employees have a visual to
guide them everyday.
Kansas State University offers these steps to proper feeder
adjustments:- Close the feeder before adding feed.
- Open feeder enough to start a small feed flow.
- Shake the feeder agitator so that feed covers 1/3 of the pan.
- Clean feeders daily; do not open the feeder more to increase feed
flow because of wet feed.
Little changes can make a significant difference in each producer’s
bottom line; tracking feed efficiency and making changes accordingly
translates into more profit.
By JoAnn Alumbaugh
Farms.com
E-mail: joann.alumbaugh@farms.com
Editor’s Note: For all your agricultural news, markets and
commentaries, go to www.farms.com
Introducing the new PIC Camborough® Family
You asked for greater lifetime reproductive performance and longevity.
You asked for more pounds of pork marketed per sow. You asked for a
higher percentage of market pigs in the full-value pay box.
Take another look at our new Camborough family, we think you will like
what you see--after all, it is just what you asked for.
www.pic.com/usa
Legislative Preview
‘Wheat Crisis’ Concerns
Bakers
The American Bakers Association (ABA) members came to
Washington, DC to ask Congress and the administration to “provide
meaningful relief” to alleviate the “growing wheat crisis.” ABA
is asking USDA to “curtail” wheat exports and allow for early out of
non-environmentally-sensitive acreage from the Conservation Reserve
Program (CRP). Congress is being asked to reassess the recent
“infatuation” with ethanol production. The National Association of
Wheat Growers and U.S. Wheat Associates in a letter to Secretary of
Agriculture Ed Schafer said, “…the U.S. wheat industry has earned a
valuable reputation as the world’s most reliable supplier. Responding
to a short-term supply crunch by restricting exports would be
ill-advised, counter to U.S. policy precedent, and would undermine the
reputation of our industry after years of investment in market
development. We must give all our customers access to U.S. wheat,
regardless of where they reside.”
Ethanol’s Impact on Meat & Poultry Prices — In a study by Tom
Elam, president of Farm Econ, U.S. ethanol policy is continuing to drive
meat and poultry prices higher. Elam said, “You cannot use the
combined grain crops of Australia and Indonesia for U.S. fuel and not
have impact on corn, soybean and foods prices.” Elam expects price
inflation to rise 6% or 7% in 2009. In the study, Elam compared what
would have happened without the federal biofuels program with what has
happened. According to his findings, farm level corn prices in 2008
would have averaged about $2.77/bu. without the program. Ethanol tax
credits have added $1.33/bu., and may drive corn prices higher than
$5/bu. in 2009. He also said the biofuels program has increased this
year’s input costs $3.4 billion in the broiler industry, $646 million
in the turkey industry, $2.9 billion in the swine industry, $2.24
billion in the cattle industry and $2.7 billion in the dairy industry.
Pork Exports Since 1986 — A study by the Pork Checkoff and
University of Missouri has found that U.S. pork exports have grown to
3.1 billion pounds, carcass weight equivalent, in 2007, up from 86
million pounds in 1986. According to Glenn Grimes, University of
Missouri agricultural economist, “We believe the total income of all
U.S. pork producers has been improved by $7.4 billion over the last 22
years by the increase in exports.”
USDA Lowers 2008 Beef Exports — USDA has lowered its 2008 U.S.
beef export forecast to 1.54 billion pounds compared to an earlier
estimate of 1.71 billion pounds. The adjustment was made based on
slower exports so far this year. The U.S. exported an estimated 1.43
billion pounds of beef in 2007.
President Signs Farm Bill Extension — President George W. Bush
signed the farm bill extension legislation and stated: “This
legislation to extend current farm programs will provide more time for
Congress to reach an agreement. If a final agreement is not reached by
April 18, I call on Congress to extend current law for at least one
year. While long-term extension of current law is not the desired
outcome, I believe the government has a responsibility to provide
America's farmers and ranchers with a timely and predictable farm
program – not multiple short-term extensions of current law. Without a
predictable policy, agriculture producers will be unable to make sound
business decisions with respect to this year's crop.”
Congress’ Spring Break — Congress is on a two-week recess.
When Congress returns, it will focus a great deal of attention on fiscal
year 2009 appropriations bills. Also, Senate Majority Leader Harry Reid
(D-NV) has indicated he would like for the Senate to address food safety
issues this spring.
Election — There are now 32 Congressmen (25 Republicans and
seven Democrats) who have announced they are retiring at the end of this
year, running for another office, or were defeated in their primary
elections. Congressman Bud Cramer (D-AL) is the latest to announce his
retirement. The biggest news so far this Congressional election year
was the election of Bill Foster (D-IL) in a special election in
Illinois. Foster will take the seat held by former Speaker of the House
Dennis Hastert (R-IL). This has traditionally been a Republican
district and was easily carried by President Bush in 2004.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
Ingelvac CircoFLEX® vaccine makes it easier to protect pigs from
PCV2 as early as 3 weeks of age or older . It starts early and stays
late.
Call Boehringer Ingelheim at 1-800-325-9167.
Pork Industry Calendar
April 1, 2008: "Exploring Opportunities: A Conference
for Aspiring Pork Producers," Quality Inn and Suites, Ames, IA; contact:
Iowa Pork Industry Center at (800) 808-7675.
April 1-3, 2008: The National Institute for Animal Agriculture Annual
Meeting, The Westin Indianapolis, Indianapolis, IN; contact: (270)
782-9798 or NIAA@animalagriculture.org.
Click
here to get National Hog Farmer's complete pork
industry calendar.
Control ileitis in as little as 10
days?
Denagard® (tiamulin) 10 is approved to control ileitis in as little
as 10 days. The small dosage and less medication time make it the most
cost-effective feed medication on the market for ileitis.
Click
on the Denagard logo to learn more.
|
|
You are subscribed to this newsletter as #email#
To get this newsletter in a different format (Text or HTML),
or to change your e-mail address, please visit your profile
page to change your delivery preferences.
For questions concerning delivery of this newsletter, please contact our
Customer Service Department at:
National Hog Farmer
A Penton Media publication
US Toll Free: 866-505-7173
International: 847-763-9504
Email:nationalhogfarmer@pbinews.com
Penton Media | 249 W. 17th Street | New York, NY 10011
Copyright 2008, Penton Media. All rights reserved. This article is
protected
by United States copyright and other intellectual property laws and may
not be reproduced, rewritten, distributed, re-disseminated, transmitted,
displayed, published or broadcast, directly or indirectly, in any medium
without the prior written permission of Penton Media.
|
|
