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2007 Swine Research Review
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State of the Industry Report
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Market Preview
Three Factors Will Shape U.S., Canada
Pork Industries
The Canadian and U.S. pork industries will be primarily
shaped by three factors, over the next 12-18 months. These factors, all
of which are at unprecedented levels, include:- Remarkably strong
live hog demand – The combination of hog quantity and price has never
before been as high as it was in April and May.
- Record-large supplies – Last week was just the second week of 2008
(the first being New Year’s week) in which U.S. FI hog slaughter was
not record large for the respective week.
- Record-high production costs – My production forecast for market
hogs sold in June (based on production parameters from Iowa State
University) is $78.66/cwt. carcass, the highest ever. But higher costs
are coming.
Will these three factors change in the coming months?
Increase? Remain near today’s levels? Decline? Those are huge
questions upon which much of the future of the industry will ride. More
important for your operation is “Do you have a plan to handle these
three factors NO MATTER WHICH DIRECTION THEY MOVE?” Such a plan will
not be easy but you should be thinking about each of them.
What can you do about hog demand? Producing hogs without quality and
utilization defects (i.e., they must have high lean content, high
quality lean and fat, have no drug residues, be within your packer’s
preferred weight range, etc.) is the demand-enhancing item most clearly
within your control. But beyond that, there isn’t much that you can
explicitly do.
Today’s strong demand is still being reflected in high CME Group Lean
Hogs futures relative to current cash prices and cash price forecasts
that I think are justified by future supplies. So, even if you cannot
do much to impact hog demand, you can take action to capture recent
strength.
We will get another read on future supplies when USDA publishes its June
Hogs and Pigs Report, and Statistics Canada publishes its July Hog
Statistics report. Every indication from the respective March and April
reports was for record-large slaughter in most of the remaining weeks of
2008 with fourth-quarter U.S. FI slaughter in excess of 30 million head.
The recent run-up of cutout values and hog prices accompanied smaller
hog slaughter totals – relative to recent levels. But those totals
were still roughly equal to the levels suggested by the March Hogs and
Pigs Report. The weeks prior to that were 3.5% LARGER than suggested by
the report. The rise in prices was impacted by smaller hog slaughter
but not SMALL hog slaughter by any stretch of the imagination.
The key here will be to have hog marketings current when the fourth
quarter arrives. If you are considering lower market weights, you must
get them lower this summer. When September arrives, slaughter runs will
be large enough that you will have no opportunity to move pigs quicker
and bring weights down. You have about 3 months.
The production-cost situation just seems to get worse every day. Using
June 2 futures prices, costs are forecasted to exceed $85/cwt. beginning
with March 2009 sales. Thursday’s near-limit move for corn and limit
move for soybeans will drive the cost forecasts even higher.
And the weather is not cooperating at all. As can be seen from Figures
1 and 2, corn planting progress and corn emergence are at or below the
slowest paces on record. These do not mean a disaster is coming but
this crop is going to need some help in terms of heat-degree days. It
appears that corn will not be planted on 3-4 million the 86 million
acres intended to be planted to corn. Late planting and emergence will,
quite likely, result in below-trend yields. The big question now is
“How much below trend?”
I hope next week’s Crop Production report will give us a better idea
of what is to come but I don’t believe it will. After seeing May’s
projected usage numbers, I fear that USDA is simply trying to make the
numbers work instead of telling us what will be the logical result of
high ethanol production on top of a disappointing crop. Prices will
almost certainly have to go higher than the levels in the May report to
drive ethanol, livestock, industrial use and/or exports to reduce corn
usage.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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.
Swine Health Preview
A. Suis Cases
Rise in Tandem with Circovirus
In recent years, swine practitioners in the Midwest have
seen a subtle increase in finishing mortalities attributed to
Actinobacillus suis (A. suis). Increases have typically been in
the 1-2% range, rather than the dramatic, high mortality cases of
porcine circovirus disease that have devastated swine finishing herds
over the past two years.
However, the losses that were attributed to A. suis did coincide
with the buildup of porcine circovirus type 2 (PCV2) activity. Data at
the Minnesota Veterinary Diagnostic Laboratory shows the frequency of
isolating A. suis increased approximately 40% from swine
submissions from 2003 to 2006 (Figure 1). The graph also shows the rate
of isolation slowed in 2007. It will be interesting to see what trend
develops in the months ahead, as fewer groups of growing pigs are
affected with porcine circovirus-associated disease due to better
control methods, including greater use in the industry of PCV2 vaccines.
A. suis is a gram-negative bacterium that is an early colonizer
of the upper respiratory tract in pigs, making it difficult to eliminate
or control by medicated early weaning techniques. The bacteria have some
toxins that behave similar to Actinobacillus pleuropneumonia
toxins, and A. suis can produce a similar, devastating pneumonia
with hemorrhage and necrosis of the lung. It can also cause a septicemia
with swollen joints and pleuritis/pericarditis, similar to what we see
with Streptococcus suis and Haemophilus suis, or skin
lesions similar to those seen with erysipelas.
Improvement in Diagnostics
Some advances have been made recently in detecting and characterizing
A. suis in pigs. Dr. Simone Oliveira’s lab at the Minnesota
Veterinary Diagnostic Laboratory has developed and validated a
polymerase chain reaction (PCR) test for detection of A. suis,
which is slightly more sensitive than isolation or detection of A.
suis in lung samples and substantially more sensitive than the use
of tonsil swabs.
To define the best sample to be submitted for PCR testing, Oliveira’s
group compared bacterial isolation and PCR detection of A. suis
using vaginal, tonsil and nasal swabs from sows, and nasal and tonsil
swabs from weaning age pigs. A. suis was detected in tonsil and
nasal swabs, but not in the vaginal swabs from a known positive
population. Prevalence was higher in tonsil swabs compared with nasal
swabs (Figure 2). Based on these results, Oliveira concluded that tonsil
swabs are the best sample for detection of A. suis (and A.
pleuropneumonia) by PCR.
Better detection methods allow for more accurate monitoring of pigs in
field trials. PCR testing of tonsil swabs is now being used extensively
by veterinarians in the field to evaluate the efficacy of different
treatment protocols to eliminate A. suis.
Click to view graphs.
Jerry Torrison, DVM
University of Minnesota Veterinary Diagnostic Laboratory
torri001@umn.edu
Introducing the new PIC Camborough® Family
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You asked for more pounds of pork marketed per sow. You asked for a
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Legislative Preview
Farm Bill Inching To The Finish
Line
The Senate passed the farm bill again including the
trade title by a vote of 77-15. The bill will be sent to President
George W. Bush for an expected veto. Next week, the House of
Representatives and the Senate are expected to vote override the
President’s veto again. This is the result of a clerical error in
which the farm bill was sent to the President without the trade title.
The trade title includes the Foreign Market Development (FMD) program,
Market Access Program, GSM 102 and 103, and food aid.
Record Ag Exports - USDA announced that it is forecasting a
record $108.5 billion in agricultural exports for fiscal year 2008.
This is $7.5 billion higher than the previous estimate. Grains and
animal products account for two-thirds of the increase. According to
USDA, the United States will export a record 63 million tons of corn and
set a new export volume and value records for pork. Canada and Mexico
continue to be the top two markets with exports forecast at $30.5
billion in 2008 which is $5 billion above 2007. China continues to be a
growth market for U.S. agricultural products. The new estimate for
China is a record $10.5 billion which is an increase of $3.4 billion
over 2007. Agricultural imports are estimated to reach a record $78.5
billion.
Haying and Grazing on CRP Acres - USDA announced that 24 million
acres of land enrolled in the Conservation Reserve Program (CRP) will be
eligible for haying and grazing after the “primary” nesting season
ends for grass-nesting birds. Secretary of Agriculture Ed Schafer said,
“This action will provide much needed feed and forage while
maintaining the conservation benefits from the nation’s premier
conservation program.” According to USDA, some of the eligible land
“must be reserved for wildlife and any land that is used under this
authority must have a conservation plan.” The most
environmentally-sensitive land enrolled in CRP will not be eligible. No
rental payment reduction will be assessed on contracts. There will be a
$75 fee for processing the modifications to the contract. The National
Cattlemen’s Beef Association (NCBA) said it opposed USDA’s CRP
announcement. NCBA said, “Cattlemen appreciate the fact that USDA
recognizes the hard times we are facing in the livestock industry, and
wants to provide some relief through this CRP plan. But this is just
the wrong solution. Any CRP relief plan must maintain a level playing
field for all farmers and ranchers, and put land back into production in
a meaningful way.” NCBA believes if haying and grazing is allowed on
CRP acres that there needs to be a corresponding reduction in CRP
payments.
July 18 Deadline for LSC and LIP Sign-up - USDA has announced
that livestock producers have until July 18, 2008, to enroll in both the
2005-2007 Livestock Compensation Program (LCP) and Livestock Indemnity
Program (LIP). These programs provide aid to livestock producers who
have suffered eligible losses due to a natural disaster during the time
period of January 1, 2005 and December 30, 2007. Sign-up started last
September.
FY ’09 Budget Passes Senate - The Senate passed the fiscal year
2009 budget resolution conference report. The Congressionally passed
budget does not include the administration’s proposal for $96 million
in new user fees for meat, poultry, and egg products inspection
programs.
USDA Names Grain Inspection Advisory Committee - USDA announced
members of USDA’s Grain and Inspection Advisory Committee. Those
appointed as new members are: Thomas E. Bressner, IL; Bennie B. Lackey,
Jr., AR; Marvin R. Paulsen, IL; and Jon G. Stoner, MT. Alternates
appointed are: Randall R. Deike, WA; Cassie L. Eigenmann, Auburn, IL;
and Paul J. Lautenschlager, ND. The advisory committee meets twice a
year to advise USDA on the establishment of programs and services under
the U.S. Grain Standards Act.
Ileitis immunity is as easy as turning on the water.
Enterisol® Ileitis keeps immunity on tap.
Call Boehringer Ingelheim at 1-800-325-9167
Pork Industry Calendar
June 22-29, 2008:
Advanced Swine Production Technology Course, University of
Illinois Campus, Urbana, IL; contact: Gilbert Hollis, professor
emeritus, Department of Animal Sciences, phone (217) 265-9191, e-mail hollisg@uiuc.edu or go to http://www.livestocktrail.uiuc.edu/porknet/eventDisplay.cfm?ContentlD=9812.
June 24, 2008: Managing People in Pork Production Conference,
Best Western Hotel & Conference Center, North Mankato, MN; contact:
Minnesota Pork Board at (800) 537-7675.
Click
here to get National Hog Farmer's complete pork
industry calendar.
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