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Dale Miller, Editor,
National Hog Farmer
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Market Preview
Hog Prices Just an
Anomaly?
To use an appropriate porcine question: Will demand
save our bacon?
When we look at the last two weeks, the answer could certainly be a
resounding “Yes!” Why else would packers be aggressively chasing
hogs when slaughter rates are so high? And why else would prices be
near year-ago levels on year-to-date (YTD) slaughter that now stands
11.5% higher than one year ago?
Supply is way up. Prices are hardly below last year. Life is good –
or at least better.
But can this hold? Can hog demand maintain the 8% increase we saw from
January through March, as was pointed out by Professor Glenn Grimes at
the University of Missouri? Will packer margins remain large enough,
without pushing hog prices downward, to maintain the incentive to
process 420,000-plus hogs/day? Will the normal seasonal break in beef
prices put pork behind the eight ball in the retail meat counter this
summer? Can broiler producers reduce supplies enough to drive
near-record prices to new highs and, thus, support the entire meat
complex? Is the recent rise in the U.S. dollar (the June U.S. Dollar
Index reached its highest level since early March last week) a turning
point?
So many questions; here’s my inadequate answer: “We’ll see.”
All of these variables have contributed to a remarkable run-up in cash
hog prices. I want to believe that the worst is behind us and the
predictions of $80-90 hogs this year, and upward for next year, are
correct. I really do. And if you believe that prices efficiently and
accurately reflect all of the information in the market, then you should
probably buy into those forecasts. Those $70-plus bids this week may be
here to stay, but I’m not a believer yet.
The reasons are simple: Large meat supplies. Huge pork supplies. More
beef on the way – at least seasonally. Higher fuel prices this
summer. And even if the hog prices remain higher, we still face
substantial risk for feed prices since we have thus far put seed corn in
the ground at a pace roughly commensurate with that once achieved by a
Model A John Deere and a two-row planter! Corn at $7/bushel is still
well within the realm of possibility.
What are you saying to your banker when he poses these questions:
- “I understand you are losing money, but what are you doing
to minimize your losses?
- “How long will these losses last?”
- “What is the extent of your cash needs until cash flows turn
positive?”
Bankers do not want to shut good producers down. They did not go into
banking in order to own hog farms or, especially, take care of hogs.
They make little money by holding cash. They want people in business so
those people will borrow money and pay interest.
What they do not want is a customer who is borrowing money, doesn’t
have a plan or an idea of how to limit that borrowing and, therefore,
doesn’t know how much will be needed before the banker can stop
advancing funds. They probably feel the same way you would feel if your
college son or daughter came to you with a large credit card bill and no
way to pay it. You want to help, but without a plan, you would (or at
least should!) say “No” because it is the best thing for everyone.
I have admonished producers for some time to have a plan in place to
limit the upside risk in feed prices. Though the level at which that
protection can be placed is much higher than it once was. Still, it’s
a prudent idea.
“But those call premiums are just a rip-off and I’m cash poor as it
is,” you say. True. But are you going to drop the insurance on all
of your hog buildings this year because cash is tight? That’s a
similar proposition and the chances of higher-priced corn are, at the
moment, probably better than the chances of a fire or a tornado.
And while the level of coverage available on corn is not as good as it
once was, the potential “ceiling” level for soybean meal has fallen
pretty sharply. So the news is not all bad.
As for hogs, the average of the eight futures contracts to cover the
next 12 months is, as of Friday morning, $75.77/cwt., carcass or
$56.82/cwt., live. The average for the rest of this calendar year is
$73.95 carcass, $55.47 live. History tells us that the summer futures
are likely near their peak as they normally fall from May 10 onward. In
fact, Tuesday’s break in Lean Hog futures could have marked the
seasonal peak.
How would your financial situation be if you put a lid on feed costs at
current levels and could lock in hog prices at $72-$73/cwt., carcass?
That is available. Would the answers for your banker be good enough to
keep him/her on board and keep you in the business until the good times
return?
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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Call Boehringer Ingelheim at 1-800-325-9167
Swine Health Preview
Molecular Tests
Speed Results
We are increasingly familiar with PCR (polymerase chain
reaction) as a diagnostic test. A rapid determination of the nucleic
acid sequence or genes present in a virus allows us to understand the
diversity and epidemiology or existence of a pathogen in a population
when it comes to common viral infections in swine.
Most diagnosticians are familiar with the use of molecular testing
diagnosis (example PCR for porcine reproductive and respiratory syndrome
[PRRS] virus or swine influenza virus [SIV]) or for further
characterization (sequence or dendogram for PRRS or SIV) for these
common viruses. The advantages of these molecular techniques are speedy
results that are accurate and specific for the agent at hand. Similar
techniques are also used for diagnosis and characterization of bacterial
pathogens.
What follows are examples of PCR techniques applied to bacterial
pathogens which can be helpful to veterinarians and producers to
determine the best tools to answer clinical questions.
Lawsonia intracellularis (Li) is the cause of porcine proliferative
enteritis or ileitis. It is a common infection and a common disease of
swine worldwide. Until 2000 or so, diagnosis required microscopic
examination of sections of affected intestine. Since that time, PCR has
also been available to detect the Li in either tissues or feces from
affected pigs. Fecal samples from grow-finish pigs with diarrhea are
useful to confirm diagnosis, although tissue examination is the gold
standard. About 46% of fecal samples submitted for Li testing are
positive. We believe the PCR is not sensitive enough to routinely detect
asymptomatic carriers of Li, therefore, positive results from fecal
samples are considered confirmation that Li is at least part of the
cause for diarrhea. Vaccination and medication strategies rely on
accurate diagnosis.
Escherichia coli is very commonly isolated from suckling and weaned
pigs, but not all isolates are pathogenic or cause disease. Molecular
techniques are routinely used to determine which genes for virulence
factors are present. Two classes of virulence factors are fimbria
(attachment method) and toxins (that cause diarrhea or edema disease).
Genotyping can determine if the particular isolate of E. coli is
pathogenic. Approximately 37% of the E. coli isolated from diarrhea
cases do not contain virulence factors. More importantly, 63% of
isolates contain one or more virulence factors. Accurate diagnosis of E.
coli disease often includes confirming that the bacteria isolated can
actually cause disease.
Virulence factors found in E. coli that contained at least one virulence
factor are outlined below:
| |
Virulence Factor | |
% | | Effect | |
| | Sta (heat stable toxin a) |
| 23 | |
diarrhea |
| | Stb (heat stable toxin b) |
| 69 | |
diarrhea |
| | LT (heat labile toxin) |
| 51 | | diarrhea |
| | Stx2e (edema disease toxin)
| | 21 | | edema disease |
| | K88 | | 47 | | attachment |
| | F18 | | 39 | | attachment |
There are other virulence factors, but these are most common to swine.
Clostridium perfringens (Cp) can be isolated from pigs of all ages and
is defined by its ability to produce alpha toxin. Enterotoxemia
(hemorrhage and necrosis of intestine of suckling pigs) is caused by Cp
type C (CptC). This is relatively easy to diagnose by lesions and PCR
can confirm the presence of alpha toxin and beta toxin (responsible for
disease). This particular strain is not detected in all pigs but is
usually significant when detected.
On the other hand, Clostridium perfringens type A (CptA) is very common
in pigs of all ages, including 1-day-old pigs. The diagnostic criteria
to confirm a role for CptA are a bit subjective, but it is assumed that
the CptA elaborates a beta2 toxin that causes mild disease and diarrhea.
Genotyping can determine if a particular isolate from a neonatal pig has
the ability to elaborate this toxin and in 2007, 106 of 145 isolates
tested were positive for beta2 toxin. This information adds confidence
that the offending agent isolated is indeed potentially pathogenic. One
likely would not select an isolate negative for beta2 toxin production
for autogenous bacterin production.
Watch for “Old” Diseases
Vigilance for less common or old swine diseases is warranted because we
have not eradicated these diseases. A couple of recent examples observed
in our laboratory are leptospirosis and swine dysentery.
Leptospirosis remains a sporadic cause of abortion in swine. Serology,
immunohistochemistry and direct examinations are useful for diagnosis,
but PCR allows pools of fetal tissues to be quickly tested with good
sensitivity. First fully implemented in 2007, this test has identified
at least 12 cases of leptospirosis. Leptospirosis is diagnosed in less
than 2% of abortion cases submitted to the laboratory, but it is very
useful to know if the disease is present irrespective of PRRS virus
status.
Brachyspira hyodysenteriae is the cause of swine dysentery, but must be
differentiated from other less- or non-pathogenic spirochetes. PCR is
used by our lab to differentiate B. hyodysenteriae from B. pilosicoli or
other spirochetes.
Molecular Testing List
The list of agents for which there are molecular diagnostic tests is
quite long. Understanding the sensitivity, specificity, applications and
limitations of each test is prudent. Communicating with your laboratory
is important to avoid technology blunders.
Agents in swine for which our lab has molecular techniques include:
| Viruses | Bacteria
|
| PRRSV | E. coli |
| PCV2 | Clostridium
perfringens |
| SIV | Lawsonia
intracellularis |
| Enterovirus |
Actinobacillus pleuropneumonia |
| PRV | Actinobacillus suis
|
| Pestivirus | Hemophilus
parasuis |
| TGE/PRCV | Leptospira
|
| CSF | Mycoplasmal
pneumonia |
| Teschovirus | Brachyspira
|
| Parvovirus | Pasteurella
multocida (toxin) |
| Retrovirus | Salmonella
|
| | Mycoplasma hyosynoviae
|
Kent Schwartz, DVM
Iowa State University Veterinary Diagnostic Laboratory
kschwart@iastate.edu
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Click
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Legislative Preview
Packer Ban Defeated
Last night, during the House-Senate farm bill conference
committee deliberations, the packer ban provision was defeated. A
number of members talked about how this proposal would hurt their region
of the country and have unintended consequences.
Farm Bill Extended Two Weeks — Congress extended the farm
bill for another two weeks until May 16. The House-Senate conference
committee last night made huge progress on a number of fronts. The
conference completed the research, rural development, conservation,
energy, forestry, crop insurance and livestock titles. The key items
remaining to be finalized are the dairy import assessment, payment
limitations and adjusted gross income limits, storage facility loans and
a few trade items. The conference is expected to meet again early next
week to complete the bill. Next week’s column will contain details of
the various provisions.
Legislation Introduced to End Ethanol Program — Congressmen
Jeff Flake (R-AZ) and John Culberson (R-TX) have introduced separate
legislation to eliminate the current ethanol program. Congress
Flake’s legislation, H.R. 5911, the “Remove Incentives to Produce
Ethanol Act of 2008,” would repeal the renewable fuel standard (RFS),
tax credits for ethanol producers and tariffs on importing ethanol.
Congressman Culberson’s legislation would eliminate income and excise
tax credits for corn-based ethanol.
Ethanol’s Effect on Food Costs — Texas A&M’s Agricultural
and Food Policy Center conducted a study on the effects of higher corn
prices on food costs. The study indicated that corn prices have little
effect on retail food prices. Some of the findings of the study are:
- “Higher corn prices do have a small effect on some food
items.
- “Important food items like bread, eggs and milk have high prices
that are largely unrelated to ethanol or corn prices, but correspond to
fundamental supply/demand relationships in the world.
- “The livestock industry has borne the costs of higher corn
prices. The structure of the industry has made it unable to pass costs
on, either up or down the supply chain.
- “The livestock industry is in the middle of this transition, and
prices do not yet reflect the impact of higher costs.
- “Relaxing the renewable fuel standard (RFS) does not result in
significantly lower corn prices. This is due to the ethanol
infrastructure already in place and the generally positive economics for
the industry. The ethanol industry has grown in excess of the RFS,
indicating that relaxing the standard would not cause a contraction in
the industry.”
Without Ethanol Retail Gas Would Be Higher — The American
Coalition for Ethanol (ACE) sent a letter to the nation’s governors to
remind them that if ethanol wasn’t available, retail gasoline prices
would be higher. The letter said, “Record-high energy costs and
rising food prices are taking a painful toll on consumer pocketbooks,
and this demands thoughtful discussion and attention. Unfortunately,
these matters have been exploited by some to pressure federal and state
governments to undo policies designed to support ethanol.” ACE also
noted that, according to Merrill Lynch analysts, “oil and gas prices
would be 15% higher if it was not for the availability of ethanol.”
ADUFA Reauthorization Requested — The U.S. Food and Drug
Administration (FDA) has proposed to Congress programs that provide
funding for the review of “pioneer and generic animal drugs.” The
Animal Drug User Fee Act (ADUFA) reauthorization would provide funding
for the review of new animal drug applications for the next five years.
FDA is also proposing the first generic user fee program (the Animal
Generic Drug User Fee Act or AGDUFA), which would support the review of
generic animal drug applications and maintain current standards of
safety and effectiveness. The National Pork Producers Council (NPPC) is
asking Congress to reauthorize ADUFA. NPPC said, “ADUFA ensures that
animal health companies are able to provide in a timely manner products
to treat and control the new diseases that our animals will face.
It’s a critical tool needed by the pork industry and veterinarians to
maintain animal health and to provide safe, wholesome and nutritious
pork.”
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
Pork Industry Calendar
May 6, 2008:
PorkCast "Introduction to Farm Estate Planning and Transfer"
Webcast program via the Internet, 1 p.m. CST; contact: Mark Whitney,
(507) 389-5541, whitn007@umn.edu
or click on www.extension.umn.edu/swine.
May 6, 2008: Porkcast online
seminar on Farm Transfer and Estate Planning; log onto the University of
Minnesota’s Swine Extension Web site: www.extension.umn.edu/swine/porkcast/.
May 7, 2008: SowBridge "Proper
Handling of Sows" 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.
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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