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Dale Miller, Editor,
National Hog Farmer
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Market Preview
What’s Up with Sow
Prices?
Just how fast are producers responding to the worst
economic conditions since price collapse of the ’98-99 – or perhaps
ever? That has been a topic of widespread discussion these past few
weeks.
For the first part of the ’98-99 time period, no one could give a
definitive answer, because it was impossible to know exactly what was
going on in Canada due to problems with the weekly import data. Those
data are now better. Not perfect, but definitely better. And, they are
probably good enough for us to conclude that Canada is indeed reducing
their herd at a rather quick pace.
U.S. sow slaughter jumped to 73,000 head last week, 11.5% higher than
one year ago (see Figure 1). At least one major sow-slaughtering firm
worked Saturday.
Canadian slaughter has lagged with the week ending March 22 (the latest
week for which data is available), down 22.6% from last year. It should
be noted that the 22.65% drop involved only 700 fewer sows than last
year, however. Canada just doesn’t process many sows. While the
entire industry needs sow plants on both sides of the border to be
operating at high throughput rates, the Canadian plants may not help
much. The strong Canadian dollar has hurt their competitive position as
well.
As slaughter has jumped, sow prices have plummeted in much the same
fashion they did in January (see Figure 2). Light sows were quoted
below $20/cwt., live, last week and there are reports of bids as low as
$10/cwt. this week. Light sows are certainly not the choice of sausage
manufacturers, as they generally do not carry enough fat to yield high
quality product. Big sows – those at 500-lb. and over – are faring
somewhat better with bids of just under $25/cwt., live, last week. But
that price is $10/cwt. lower that just four weeks ago.
Why are sow prices tanking so quickly when offerings increase? There
have been rumors that we just can’t handle the large number of sows
coming to plants right now. The statement is reminiscent of the fall of
1998, when butcher hog plants were operating at maximum rates and hog
prices were falling to record lows. Hog offerings were huge, packers
simply could not push more through the plants and they could basically
choose the price they wanted to pay for hogs that had to move off farms.
Though producers are almost desperate to get culled sows off the farm
due to high feed costs, the situation in the sow market is somewhat
different than the ’98 scenario. Figure 3 shows the results of my
phone survey last fall regarding daily slaughter capacity of plants that
process cull sows and boars. Note that USA Pork Products’ Hazellton,
PA plant is generally not used for sow processing, so the capacity of
sow plants is roughly 17,000/day.
A full, five-day week could handle 85,000 sows and any Saturday shifts
would add to that weekly total. Therefore, I don’t think slaughter
capacity has anything to do with the rapid declines in sow prices that
we saw last week and back in January.
The better explanation is a mismatch between the pace of product
movement and sow offerings. Pork sausage sales volume is relatively
stable. It seems that people who eat sausage tend to eat it regularly,
so there are not large ebbs and flows of sausage sales. Sales of dinner
sausages, such as smoked sausage and bratwurst, tend to be more seasonal
and really do not pick up until the weather warms and grills get fired
up. This year’s cool, damp spring has delayed avid barbecuers and,
thus, has also delayed dinner sausage and bratwurst sales. If product
is not moving, sow processors are not very interested in processing more
sows.
In addition, one must consider the nature of these sausage products.
They are not fresh, generic pork products that we put on sale at
attractive prices in order to move large volumes through retail outlets.
Most of these sausage products are branded. The companies have
invested years to build a quality image for these brands and price is
one facet of quality in many consumers’ minds. Does it make sense to
cut prices in order to slaughter a few more sows? What might such a
move say about the quality image of the product?
It appears to me that sausage companies are going to buy just as many
sows as they can efficiently process and sell as product. Some may take
a chance on putting product in the freezer in anticipation of warmer
weather at any time, but don’t expect much of that. Many of these
sows are hot-boned in order to make plants more efficient and yield a
product with proper texture for premium sausage products. Sow packers
generally avoid putting product in freezers and certainly do not want
large quantities of this product frozen.
The pace at which we can slaughter cull sows will be a key factor in
determining how long these large supplies and low market hog prices will
last. The introduction of circovirus vaccines created, almost
overnight, something in the neighborhood of 6-8% too many sows in North
America.
The only way to get back to profitability in the face of high costs is
to reduce supplies, which can only be done by reducing the sow herd.
Let’s hope spring weather arrives soon so sausage movement will
increase and sausage manufacturers can ramp up their plants to full
capacity.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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.
Swine Health Preview
More to Learn
About Circovirus
Much has been accomplished in addressing the production
challenges posed by porcine circovirus type 2 (PCV2), but many
questions remain.
The big stories over the past three years have dealt with the rapid
spread and dramatic losses caused by porcine circovirus associated
disease (PCVAD), followed by the equally dramatic effectiveness of PCV2
vaccines in controlling the disease. But, researchers continue to sort
through the remaining questions on how the disease spreads and how it
affects pigs.
The debate over the cause of PCVAD has fairly well settled on PCV2,
especially in light of the effectiveness of the vaccines. This leads to
additional questions about how a virus that apparently existed in pig
populations for at least 20 years with little noticeable effect,
suddenly became a major cause of disease. Several research groups have
identified a change in the genetic makeup of PCV2, which might explain a
change in how the virus affects pigs.
A brief discussion on nomenclature might be helpful here, since it’s
easy to get lost in the trees with all the different names that have
been used in association with this disease.
When the differences in the virus were first noted in North America, the
virus groups were described based on the RFLP cut pattern, with the
“422” pattern representing the old and “321” representing the
new. Later on, researchers at Kansas State University identified a key
region of the DNA that could be used to sort out the viruses. They
called the older virus “PCV2a” and the new virus “PCV2b.” Other
labs are proposing other nomenclature, as well, and these are summarized
in Figure 1 as a reference.
To refresh your memory a bit, RFLP stands for "restriction fragment
length polymorphism," a method used to compare the genetic makeup of
viruses and other organisms based on how the genes are snipped into
different-sized pieces using a set of enzymes. The comparison provides a
three-digit "name" for groups of viruses. The viruses that fit into the
RFLP pattern, designated by the three numbers, tend to be related
genetically, but there are so many exceptions (unrelated viruses within
the group and related viruses not in the group), that it is generally
considered an unreliable measure of relatedness for a virus. (See Swine
Health Preview in the Feb. 8, 2008, North American Preview posted
at www.nationalhogfarmer.com for additional discussion of RFLP patterns
and their relationship to the porcine reproductive and respiratory
syndrome [PRRS] virus).
Returning to the discussion of porcine circovirus strains, there has
been a definite shift from PCV2a to PCV2b viruses in cases submitted to
the Minnesota Veterinary Diagnostic Lab (MVDL). Figure 2 illustrates the
shift from predominantly PCV2a prior to 2006, to almost entirely PCV2b
by the end of 2007. The comparison was made using PCV2 sequences
generated by the MDVL molecular diagnostics laboratory that were further
analyzed by Juan Abrahante in Mike Murtaugh’s research lab. Several
reports have been published in recent months, linking the PCV2b group of
viruses to PCVAD. Fortunately, the commercial vaccines appear to protect
pigs against the full range of PCV2 types.
Click to view graphs.
Jerry Torrison, DVM
University of Minnesota Veterinary Diagnostic Laboratory
torri001@umn.edu
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Legislative Preview
Corn and Cotton
Down, Soybeans and Wheat Up
The much anticipated USDA planting intentions report was
released this week with corn and cotton acres down and soybean and wheat
acres up. USDA estimates that corn growers intend to plant 86 million
acres of corn in 2008, which is down 8% from 2007. Soybean producers
are expected to plant 74.8 million acres this year, which is up 18% from
2007. Wheat is estimated at 63.8 million acres, up 6% over last year.
Cotton acres are expected to total 9.39 million acres, which is 13%
below 2007 levels.
NAIS Business Plan — USDA’s Agricultural Marketing Service
(AMS) released a draft “business plan” to further the implementation
of the National Animal Identification System (NAIS). The plan shows how
participants in AMS’s voluntary programs, such as the USDA Process
Verified, the Quality Systems Assessment, and the Non-Hormone Treated
Cattle Programs can meet the inherent animal identification requirements
by using NAIS. According to Bruce Knight, under secretary of
agriculture for Marketing and Regulatory Programs, "The AMS Business
Plan will allow for integration of the National Animal Identification
System with AMS audit-based marketing programs. NAIS is a voluntary
partnership among producers and government. This immediately provides
the producer a twofold reward for a single investment. It ensures
traceback of their animals for herd health reasons and provides benefits
for marketing value-added animals domestically and internationally."
USDA says NAIS would make it easier to properly label product for sale
in American grocery stores. This will help meet the objectives of the
country-of-origin-labeling (COOL) program.
DDGs Do Not Increase E. coli — A new Kansas State University
study concluded that the prevalence of E. coli 0157:H7 or salmonella are
no different in cattle fed dried distillers grain (DDGs) or cattle fed
steam-flaked corn. An earlier study suggested that feeding cattle DDGs
increased the shedding of E. coli in fecal matter. The report stated,
“Unlike our previous studies, we found no evidence to indicate that
dietary inclusion of distiller’s grains or corn processing methods
have a significant effect on the prevalence of E. coli 0157:H7 or
salmonella in cattle feces.” USDA is conducting a similar study.
Canada, Mexico & U.S. Protocol on Breeding Cattle — Canada,
Mexico and the United States announced protocols to harmonize standards
for the export of U.S. and Canadian breeding cattle to Mexico,
consistent with international standards. Secretary of Agriculture Ed
Schafer said, “We mutually agreed on the importance of normalizing
beef and cattle trade in North America consistent with the guidelines
established by the World Organization for Animal Health. Our respective
industries have benefited when our countries have worked together and we
are confident that we can build on our history of trust and
collaboration to continue to resolve issues and to help set the standard
for progressive trade policy and science-based practices with other
countries." The protocols were announced during the first meeting on
agriculture, food and trade held between the three countries since full
implementation of the North American Free Trade Agreement (NAFTA) on
Jan.1, 2008.
New USTR Agricultural Ambassador — Ellen Terpstra is
nominated to be chief agricultural negotiator for the Office of U.S.
Trade Representative (USTR). Terpstra now serves as USDA’s deputy
under secretary of agriculture for Farm and Foreign Agricultural
Services. She previously served as administrator of USDA’s Foreign
Agricultural Service. Prior to joining USDA, she served as CEO of the
USA Rice Federation and U.S. Apple Association.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
 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
Murphy-Brown LLC,
the pork production division of Smithfield Foods, has the following
immediate openings in its Oklahoma operations:
- GENERAL MANAGER of Oklahoma to be based in TEXHOMA, OK.
Responsibilities included managing 450 employees and more than 65,000
sows. Requirements include 10 years of production agriculture
experience with 6-8 years of proven management experience and a BS
degree in agriculture referred. Must have an excellent track record of
effective business management and leadership and development of
employees.
- SOW FARM MANAGER for a 2,500 head sow farm near Beaver, OK
- HEAD OF DEPARTMENT for 2,500 sow farm located near Texhoma,
OK
- ELECTRICIAN FOREMAN for the Laverne, OK operations.
Competitive salary, including incentive, and benefits package.
Please submit resume and salary history to:
Murphy-Brown LLC
Attn: Rina Teel
911 Texas Street P. O. Box 409
Texhoma, OK 73949
rinateel@murphybrownll.com
FAX 580-423-2416
EOE
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
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