What's new on National Hog Farmer?
- Searching
for Hidden Dollars
- Preparing
for FMD
- Building
Functional Biosecurity Barriers
- Producers
Face Some Tough Losses Before Profits Return
- Current Issue:
Spotlight on Herd Health
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Market Preview
Watch for
Feed Buying Opportunities
What we characterized as a “small decline in projected
hog feed costs” last week is developing into a potential buying
opportunity for pork producers. The price declines of the past week for
both corn and, to a lesser degree, soybean meal futures, may develop
into one of the best chances we will see to lower feed costs for the
coming year.
Figure 1 shows my feed cost index calculations updated to include
Thursday’s close for corn and soybean meal futures. I have argued
recently that producers must be prepared to take advantage of what once
would have been seen as small declines in feed costs and prospective
feed costs. We saw one of those times in mid-March (the pink and red
lines in Figure 1) when the collapse of Bear Stearns forced some fund
managers to liquidate commodities positions to raise cash.
The feed cost index’s decline in the past two weeks has been larger
than the March reduction, so I think producers should be sharpening
their pencils and marshalling the necessary resources (i.e. credit line,
margin money, etc.) to make a move.
Note that I did not say “Go!” Figure 2 shows the daily chart for
December corn futures – and it looks much the same as every other
chart all the way through September 2009. All of them broke through the
50-day average this past week. All of them broke through a major
support line off spike lows in March and May this past week. All of
them have a chart gap within 10¢ below Thursday’s close. All of them
have another resistance-support objective in the neighborhood of $6.00.
That is a lot of usage of the word “all” even for grain contracts
that, quite understandably, are usually similar within a crop year.
None of these charts say that the decline is over, and my windshield
survey of the Iowa, Illinois and Missouri corn crops this week say there
is still downside potential. Iowa’s crop has no doubt done some
catching up and, while still 7-10 days behind by most estimates, is
looking much better. Western and central Illinois corn crops look very
good. Northern Missouri is very spotty with some excellent-looking corn
and some that may not make good silage. Still, the major corn areas
seem to be improving, and there could be some more downside in this
market. Be ready.
One side note – Don’t wait too long. The corn market has bottomed
out in early September each of the past two years. Those of us who were
waiting for “harvest” lows got fooled. It looks like it is the
southern Corn Belt harvest that sets the timing these days.
Adjust to New Pig Values
Have you adjusted your management and decision-making to the new
realities of the value of pigs? The changes we have seen in feed costs,
sunk costs, financial risk, etc. should be driving some changes in our
attitudes to a host of management decisions.
Consider the following total cost figures for market hogs from Iowa
State University’s (ISU) Estimated Costs and Returns series and my
forecasts based on the ISU parameters:
- May ’06: $101.67
- May ’08: $154.91
- May ’09: $186.40
May 2008 costs are 53% higher than one year earlier and May 2009 costs
will be 20% higher than current costs.
Those numbers mean that all of the valuation losses that can beset pigs
will be much more painful. Death loss, morbidity, dead on arrival at
plants, non-ambulatory pigs, carcass condemnations – all of them will
be far more painful now and will be even more so in months to come.
Further, since these figures represent cost numbers and not foregone
market value, they are money that you have already spent and, perhaps,
borrowed so they can represent even more interest costs.
Have you done a critical evaluation of your “loss-preventing”
strategies in light of these higher costs? I know you have plenty on
your management plate, but this is one area that should probably be
added somewhere near the top of your list. The consequences are going
to get larger.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.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
Production Preview
Identifying Herd
Improvement
Last week, we began a discussion on benchmarking, and
how it is more important than ever to identify areas of herd improvement
in these trying times. Our list of industry-level opportunities includes
the following:
- Removal rates: We see high removal rates in many
herds, and in some recent analyses, it appears that removals to improve
reproductive performance are often misguided. Conversely, high levels
of removal due to lameness are probably correct, but the root causes of
lameness need to be addressed to manage removal rates. Most of all,
there is increasing evidence that high removal rates can affect the
quality of subsequent progeny performance, as gilt progeny are more
susceptible to various insults.
- Variation of piglet production: This is another variable
that indirectly affects the quality of progeny. Not only are there
seasonally low levels of piglet production, but also these low levels
are often followed by overproduction. We see an inverse relationship
between piglet production and weaning age on many farms, so that weaning
ages fall below target levels and poorer performance is seen in
subsequent stages of production.
In the coming months we will review the 2007 PigCHAMP cumulative
benchmark records. As we analyze and review the 2007 performance of the
North American sow herd, remember that the opportunities remain the same
but the rewards will be increasing.
In some ways, the title of the book by Spencer Johnson, "Who Moved My
Cheese? An Amazing Way to Deal with Change in Your Work and in Your
Life," is an appropriate theme. We would go a step further and
emphasize that the cheese has not disappeared, but it will reappear in
larger amounts and in different places. However, this new market will
be less forgiving of low productivity.
With this reality, this benchmark review should be more appropriate than
ever to allow you to emphasize the real opportunities of improvement in
swine production.
Sukumarannair S. Anil, DVM, and John Deen, DVM
sukum001@umn.edu or deenx003@umn.edu
Swine Disease Control Made Easy. Introducing Ingelvac MycoFLEX®.
Call Boehringer Ingelheim at 1-800-325-9167
Legislative Preview
Animal Drug
User Fee Act Approved
The House Energy and Commerce Committee approved H.R.
6432, the Animal Drug User Fee Act (ADUFA). This legislation authorizes
the Food and Drug Administration (FDA) to collect fees from the animal
health industry to be used for the review and approval of animal health
products. The fees supplement FDA’s Congressional appropriations to
provide for more timely review of new animal drugs.
Since ADUFA was originally passed in 2003, FDA has been able to reduce
its review time for new animal drugs. This has allowed new drugs to
enter the marketplace quicker, while at the same time maintaining high
standards for safety and effectiveness.
The committee also passed H.R. 6433, which establishes the Animal
Generic Drug User Fee Act (AGDUFA) and implements a fee program for
generic animal drugs. Neither bill limits the use of antibiotics for
animals as some congressional members had been advocating. This was a
major concern for producer groups and industry. National Pork Producers
Council (NPPC) President Bryan Black said, “Passing ADUFA favorably
through the House Energy and Commerce Committee was a win for pork
producers. I urge Congress to quickly approve both ADUFA and AGDUFA
without additional amendments that would make it more difficult to keep
animals healthy and maintain a safe food supply.”
Energy Speculation — Senate Majority Leader Harry Reid (D-NV)
has indicated his strong desire for the Senate to pass legislation
concerning speculation in the energy market. Sen. Reid has introduced
S. 3268, the “Stop Excessive Energy Speculation Act of 2008.” The
legislation would increase the resources and authority needed by the
Commodities Futures Trading Commission (CFTC) to detect, prevent and
punish price manipulation and excessive speculation, and give the CFTC
emergency authority needed to rapidly implement the legislation. The
House Agriculture Committee has been holding a number of hearings on
this issue and is expected to pass legislation before the end of the
month.
E-Verify Reauthorization — Congressman Chris Cannon (R-UT)
has introduced H.R. 6454, which would extend and expand the E-verify
program. This program is widely used in the meat and agricultural
community to verify the legal status and eligibility of workers. This
legislation provides for the extension of this voluntary program, which
expires on Nov. 30.
Recalled Meat and Poultry Products to be Listed — USDA has
announced that beginning in August, it will list retail stores receiving
meat and poultry products involved in Class 1 recalls. Secretary of
Agriculture Ed Schaefer said, “The identity of retail stores with
recalled meat and poultry from their suppliers has always been a missing
piece of information for the public during a recall. People want to
know if they need to be on the lookout for recalled meat and poultry
from their local store and by providing lists of retail outlets during
recalls.” The American Meat Institute (AMI) stated its strong
opposition saying, “The most accurate way to make this determination
is to rely upon product identifiers like code dates, plant numbers and
brands announced by recalling companies.” AMI believes providing this
information to consumers will be more useful in determining which
products have been recalled.
Farm Bill Celebration — This week, members of Congress and
the agricultural, conservation and nutrition communities held one of the
largest agricultural receptions on Capitol Hill this year, celebrating
the passage of the 2008 farm bill. House Speaker Nancy Pelosi (D-CA)
joined in thanking everyone for their efforts in passage of the bill.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
Make ileitis disappear?
Denagard® (tiamulin) 10 is approved to control ileitis in as little
as 10 days. And with its small dosage – 35 grams tiamulin/ton – and
less medication time, no other feed medication is as cost-effective for
controlling ileitis.
Click
on the Denagard logo to learn more.
Pork Industry Calendar
Aug. 6, 2008:
SowBridge “Managing Gilts for Productivity and Longevity” remote
program via phone and computer, noon and 7 p.m. CST; contact: Mark
Whitney, (507) 389-5541, whitn007@umn.edu or click on www.extension.umn.edu/swine.
Aug. 7, 2008: PorkBridge
“Properly Walking Pens and Observing Pigs” remote program via phone
and computer, noon and 7 p.m. CST; contact Mark Whitney, (507) 389-5541,
whitn007@umn.edu or click on www.extension.umn.edu/swine.
Click
here to get National Hog Farmer's complete pork
industry calendar.
New to the Team. Veteran of the Game.
Fast-acting Baytril® 100 (enrofloxacin) is approved for treatment
and control of swine respiratory disease. When a proven winner joins an
already great team, the results are phenomenal. So Bayer Animal Health
is proud to offer Baytril 100 for treatment and control of swine
respiratory disease (SRD) in all phases of production. For use by or on
the order of a licensed veterinarian. Swine intended for human
consumption must not be slaughtered within 5 days of receiving a single
injection dose.
Click on the Baytril 100 logo for more information.
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