What's new on National Hog Farmer?
- Seeking
More Full-Value Pigs
- 12
Risk Factors Worth Checking
- Manure
Use Terms Revisited
- Hog
Company Condemns Acts of Animal Abuse
- Blueprint Issue: Sow
& Pig Care – Birth to Weaning
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
Canadian Sow Cuts Are
Sizable
Canada’s quarterly Hog Statistics report confirmed
what many expected this week when it pegged the country’s breeding
herd at 1.416 million head, 8.6% lower than one year ago. In addition,
Statistics Canada revised its breeding herd data for January, April and
July downward largely in line with levels that analysts and industry
observers believe to be correct.
Figure 1 shows year-over-year percentage changes for breeding herds in
Canada, the United States, and the two countries combined.
The original breeding herd estimates for January, April and July are
represented by the X’s in Figure 1. As you can see, this month’s
revisions are significant, especially for July where the year-over-year
change went from -4.6% to -7.4%. That is not a surprise to readers of
this column, as I questioned the July estimate when it was published in
August. This number is much more in line with what I expected given the
losses incurred by Canadian producers since 2005 and the ongoing
breeding herd buyout program in Canada.
As of the September and October counts in the United States and Canada,
respectively, the U.S. breeding herd is 160,000 head smaller than one
year ago, while the Canadian herd is lower by 127,900 head. The
287,900-sow decline amounts to a 3.7% reduction in the combined breeding
herd – still a relatively small cutback when one considers what would
be required to drive prices high enough to cover higher production
costs. Granted, the production cost increases do not appear to be as
large as they once did, but my forecasts for U.S. costs based on futures
market prices are still near $70US/cwt., carcass, for most of 2009.
The Canadian breeding herd is now 217,500 head smaller than it was at
its peak in January 2005. The U.S. breeding herd is 172,000 head
smaller than its most recent cyclical peak in December 2007. Again, the
two combined herds are 287,900 head (3.7%) lower than at their combined
peaks in October 2007.
Canada’s producers reduced farrowings by 3% in the July-September
quarter but plan much larger reductions for this fall (see Figure 2). I
would be surprised if actual farrowings fell by this much given the
ability of producers on both sides of the border to increase efficiency
in difficult times.
I discovered a curious practice on the part of Statistics Canada in this
report – they do not publish farrowing intentions for two quarters
forward in the April or October reports. I had never realized that
before, so I inquired about the practice. Their polite reply: “We’ve
always done it this way, but we will take a look at changing it.”
That was a very reasonable response, especially when the respondent also
told me that intentions for January-March (for which Stats Canada
apparently gathered data but did not publish) were about the same as
those for October-December. That number is reflected in Figure 2 as a
roughly 5% reduction from January-March 2007 – far smaller than the
planned reduction in the fall quarter.
Guarded Optimism
Are Canadian producers optimistic about 2009? I would say they are
guardedly so, willing to take a wait-and-see attitude with feed prices
falling. The same pattern (a smaller decline in two-quarters-forward
intentions than for one-quarter-forward intentions) was apparent in the
September U.S. Hogs & Pigs report.
The bottom line is: Reductions in breeding herds continue, but
productivity gains will eat up much of the declines by the time pigs
reach slaughter weight. A Canadian breeding herd that was 7.4% smaller
on July 1 produced a July-September pig crop that was only 2.5% smaller
(see Figure 3). That productivity increase is even larger than what the
U.S. report indicated. It fits my expectations, though, since sow herd
cuts have been deeper in Canada, leaving only the most productive farms
and sows still active.
Based on the most recent pig reports from each country, I still expect
2009 Canadian-U.S. slaughter to be less than 3% smaller than 2008. That
will not support prices enough to cover higher costs unless hog demand
remains excellent. And we are seeing some problems on that front as
both meat and byproduct values fall.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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.
Financial Preview
I Must Be Dreaming
I’m trying to find the words to express the events
that have occurred this year. Imagine that you have been stranded on an
island for the past 10 months. And when you make it back to
civilization, you ask someone what’s been happening? Here are some of
the things you might hear: - Corn prices were over $8/bu. in July,
but four months later, corn prices were below $3.80/bu.
- In July, oil was $145/barrel, which drove gas prices to $4/gal. By
October, oil prices dropped to nearly $60/barrel and the price of gas
dropped to $2/gal., or even less.
- Soybeans were over $16/bu. in July, but dropped to below $8.50/bu.
in October.
- Some producers received over $90/cwt., carcass, in August for their
hogs and next summer’s futures prices climbed to $100/cwt., carcass.
Some of us were afraid to lock in the price because we didn’t think it
was high enough.
- Lehman Brothers no longer exists. And now we have a $700 billion
economic bailout program because the U.S. financial industry is in a
severe credit crisis.
By the time you had heard the first three points you might be shaking
your head and declaring: “That can’t possibly be true.”
Unless you lived it, all of this may seem pretty far-fetched, but we all
know it to be true.
I talk to producers every day and the most asked question I get is:
“What’s next?” All I can say for now is “probably more of the
same.” I have empathy for producers who are trying to figure out how
to develop a marketing plan during this volatile time. Some producers
who locked in corn and soybean meal at higher prices are beating
themselves up because they wish they would have waited. I understand and
I should have taken my money out of my 401K last year, but I didn’t.
The point is, you can’t look back and change history, so it’s
important to keep looking forward.
There are a couple of key items that I believe successful producers are
doing during this time of volatility and I offer them here for your
consideration:
- They stick to their plan. This year’s profitable
producers are disciplined marketers and they do not deviate from their
strategy. They work on a certain margin that they can accept and then
they execute that strategy. They do not look back. They might not hit
the home run this year, but they are profitable.
- They focus on costs, but they focus more on margins –
profitable margins. Someone asked me this week what is a good
benchmark for cost of production? My response: “I benchmark producers
on profitability, not costs.” Never has that been more important than
this year. I can show you cost of production differences of over
$30/head, but the low-cost producer might not be the most profitable. I
have producers that have a cost of production going into 2009 that will
average close to $160/head, but they will also be profitable because of
their risk management plan.
- They are all very good at producing pork. I continue to be
more and more impressed by the survivors in this business. They are
continuing to work on being better at production. We have many farms
today that are weaning over 10.5 pigs/litter. I can show you over 15,000
sows that are producing over 28 pigs/sow/year. I can also show you
wean-to-finish mortalities in larger systems that are under 3%. These
are very impressive figures and I am proud to work in an industry that
is the best in the world at what they do.
In my opinion, if you are to be successful, you must concentrate on
these three things.
Mark Greenwood
Swine Industry Consultant
Contact Greenwood at mgreenw@agstar.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
USDA Clarifies
Comments on Ethanol Plant Loans
USDA clarified earlier comments by Secretary of
Agriculture Ed Schafer regarding the possibility of USDA loans to
ethanol plants that were hurt by high commodity prices earlier this
year. According to USDA, this is not a new program that was created to
help plants that neither made "bad investments" nor is it a "bail out"
for ethanol plants. Under the existing program, USDA could provide up
to $25 million per company to refinance through a "guaranteed loan-type"
program for operating capital. Loans of this type are available through
USDA’s Business & Industry (B&I) Loan Guarantee Program. Schafer has
indicated that ethanol plants would be treated the same as other
agricultural companies that can use the existing loan guarantee
programs. Representatives of the meat and livestock industries met with
Schafer this week on his earlier announcement regarding ethanol plants.
USDA Revises October Crop Forecasts — USDA revised its
October acreage and production forecasts due to a discrepancy in the
Farm Service Agency’s (FSA) database of crop acreage. The forecast
for corn production is now projected to be 12.033 billion bushels, down
1.4% or 167 million bushels from the Oct. 10 forecast. The forecast for
soybean production is down 45 million bushels, now projected at 2.94
billion bushels. With these revised forecasts, the 2008 corn crop will
be the second largest in history and the soybean crop will be the fourth
largest.
California Prop 2 on the Ballot Next Tuesday — Californians
will vote on Proposition 2, which would ban modern confinement housing
for egg-laying hens, sows and veal calves. This proposition is strongly
supported by animal rights and vegetarian groups. California Governor
Arnold Schwarzenegger this week urged a "no" vote on this proposal. The
outcome of this proposition will influence national efforts concerning
animal welfare issues.
NPPC Urges USDA to Review Mexican Pork Industry — The
National Pork Producers Council (NPPC) is urging the U.S. government to
make completion of risk assessments for Classical Swine Fever in a
number of Mexican states a top priority. In a statement, NPPC said it
"supports a science-based decision regarding the importation of Mexican
pork and pork products into the United States, and we have urged Animal
& Plant Health Inspection Services (APHIS) to make completion of its
risk assessments for the remaining Mexican states a high priority. We
also have urged APHIS to quickly begin the rule-making process to allow
Mexican pork imports once the risk assessments have been completed."
This was the result of meetings between NPPC and Mexican government
officials concerning market access. In 2007, the United States exported
$417 million in pork products to Mexico, while Mexico exported $34.5
million of products to the United States.
Meat Industry Records Less Illness and Injury — Meat industry
injury and illness incidence rates now stand at the lowest level ever
recorded. This is according to recent data from the Bureau of Labor
Statistics 2007 annual safety results. The animal slaughter and
processing sector's total industry recordable rate – cases per 100
fulltime employees – dropped 7.7% in 2007. The injury and illness
rates declined 3.2% in 2007. The meat industry’s Occupational Safety
& Health Administration (OSHA) recordable rates have improved by 72%
since the industry adopted ergonomic guidelines in 1990. According to
the American Meat Institute, "These encouraging trends confirm that the
meat industry’s decision to make worker safety a non-competitive issue
and work cooperatively to enhance workplace safety has created
measurable and meaningful workplace safety improvements."
VOTE — Remember to vote on Tuesday!
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
Pork Industry Calendar
Nov. 11, 2008: Carolina Swine
Nutrition Conference, Sheraton Imperial Hotel in the Research Triangle
Park, Raleigh, NC; contacts: Eric van Heugten, North Carolina State
University at 919-513-1116 or Eric_vanHeugten@ncsu.edu or
Bonnie Holloman, Carolina Feed Industry Association at 919-855-8981 or
bonnieholloman@bellsouth.net.
Nov. 11-12, 2008: University of Missouri Extension Commercial
Agriculture Swine Institute, Courtyard by Marriott, Columbia, MO;
contact: Ericka Lovercamp at 573-882-9552 or lovercampe@missouri.edu.
Click
here to get National Hog Farmer's complete pork
industry calendar.
|
|
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.
|
|
