NHF_WEEKLY PREVIEW_ A Penton Media Property August 31, 2009 If you want to view this on the web go to: http://enews.penton.com/enews/nationalhogfarmer/v/416 MARKET PREVIEW --Sow Slaughter Finally Takes Upward Path U.S. federally inspected (FI) sow slaughter finally went above year-ago levels the week of Aug. 15. That's one of those occurrences that is hoped for and lamented at the same time. It means we may have turned the corner to the liquidation that is needed to restore profitability to our business. But it also means that some friends and perhaps neighbors will not be in the business to see those profitable days. Figure 1 shows weekly sow slaughter for 2008 and 2009 as well as the weekly averages for 2003-2007. August 15 marks only the third week this year in which U.S. sow slaughter has been larger than one year ago. The others were the weeks of Jan. 10 and July 25. The same pattern holds true if one considers sow slaughter as a percentage of the breeding herd, which is probably a better measure of sow herd change, since we should expect lower numbers of slaughter sows with a smaller breeding herd. The week of Aug. 15 was the second-highest percentage of the breeding herd (1.16%) this year, second only to January 8 (1.18%). Through Aug. 15, 26.6% of the breeding herd has been slaughtered thus far in 2009, compared with 29.6% in 2008. To view the full article go to: http://nationalhogfarmer.com/weekly-preview/0831-sow-slaughter-upward-path FINANCIAL PREVIEW --When Will the Hog Market Get Better? I can't tell you how many times I have been asked this question over the past 12 months. In 2007, the industry had strong profits and strong balance sheets. That was a long time ago. The bottom line is this -- if demand remains sluggish, it could take until 2011 for the pork industry to be consistently profitable again. We will eventually get supply down, but it will take a while longer for this to occur. In our last severe downturn (1998-99), a good portion of the industry could exit the business and turn back to crop farming. Some actually became a contract grower for someone else. The current issue is the swine industry has become more specialized. The top 30 producers represent almost 70% of the industry. Pork production is their livelihood. If they decide to get out of the business, it's likely they do not have another option to turn to. This is why it's taking so long for the industry to contract. The swine industry is very good at producing 115 million pigs. However, with current demand, we only need 105-107 million pigs -- a reduction of 5-7%. We will get there, but unfortunately it will be a slow and painful process. A Challenge to All Pork Producers -- I have spoken to several groups this past year and every time I have urged people to become an advocate for the industry. I believe this is our biggest Achilles heel. We are great at production, but we need to do a much better job of "rebranding" our industry. We need to take steps to make the industry better -- not only from a profitability standpoint -- but also from a public perception standpoint. We can no longer set back and just raise pork. Here is my challenge for each of you: To view the full article go to: http://nationalhogfarmer.com/weekly-preview/0831-when-will-hog-market-better LEGISLATIVE PREVIEW --Ten-Year Budget Deficit to Reach $9 Trillion The Obama administration has announced it expects the 10-year budget deficit to reach $9 trillion. This is approximately $2 trillion more than was estimated earlier this year. The administration said the deficit is a "result of a deeper-than-expected recession, certain spending programs (such as unemployment insurance and food stamps) are projected to automatically increase and revenues are projected to automatically decline, compared to our previous projections." Congressional members were raising concerns earlier this year about the increasing deficit. This could have an impact on the health care debate when Congress returns after Labor Day. Farm Storage Facility Loan Program -- USDA announced changes to the Farm Storage Facility Loan (FSFL) program as a result of the 2008 farm bill. This will allow producers of eligible commodities to obtain low-interest financing to build or upgrade farm storage and handling facilities. The maximum principle amount of a loan through FSFL is $500,000. Participants are required to provide a down payment of 15%, with the Commodity Credit Corporation (CCC) providing a loan for the remaining 85% of the next cost of the eligible storage facility and permanent drying and handling equipment. Loan terms of 7, 10 or 12 years are available depending on the amount of the loan. Interest rates for each term rate may be different and are based on the rate which CCC borrows from the Department of the Treasury. Corn, grain, sorghum, rice, soybeans, oats, peanuts, wheat, barley or minor oilseeds harvested as whole grain are the commodities that are eligible for the program. To view the full article go to: http://nationalhogfarmer.com/weekly-preview/0831-ten-year-budget-deficit-trillion NEWS FLASH --Time Magazine's Cover Article Draws Pork Industry Rebuttal National Pork Board (http://www.pork.org/) President Tim Bierman has sent a strongly worded letter to the editor of Time magazine for its recent cover story, "America's Food Crisis and How to Fix It. (http://www.time.com/time/health/article/0,8599,1917458,00.html)" For starters, there is no food crisis in America, he says. "Americans have access to abundant, safe and affordable food that is the envy of the rest of the world. It is produced by caring farmers using methods that are supported by science and backed by experience," Bierman responds. "Unfortunately for Time's readers, the food plate of the article's author, Bryan Walsh, is half empty. He blames modern pork production for much of what he considers to be today's environmental concerns. He says pigs eat too much corn-based feed, which in turn, relies on too much commercial fertilizer. To view the full article go to: http://nationalhogfarmer.com/nutrition/news/0831-time-cover-article PORK INDUSTRY CALENDAR Sept. 1, 2009: Carthage Veterinary Service (CVS), Ltd. 19th Annual Swine Conference, Western Illinois University, Macomb, IL; contact: CVS at (217) 357-2811 or visit www.hogvet.com (http://www.hogvet.com). Sept. 10, 2009: Midwest Swine Nutrition Conference, Indiana Farm Bureau Building, Indianapolis, IN; contact: Tip Cline at Purdue University at tcline@purdue.edu (mailto:tcline@purdue.edu) or visit www.swinenutritionconference.com (http://www.swinenutritionconference.com). Sept. 15-16, 2009: 70th University of Minnesota Nutrition Conference, Holiday Inn, Owatonna, MN; contact: http://www.ansci.umn.edu/mnc.html (http://www.ansci.umn.edu/mnc.html). To view the full article go to: http://nationalhogfarmer.com/calendar/ ABOUT THIS NEWSLETTER You are subscribed to this newsletter as #email# To subscribe to this newsletter go to: http://subscribe.nationalhogfarmer.com/?tc=NLSUB To unsubscribe from this newsletter go to: http://subscribe.nationalhogfarmer.com/?tc=NLSUB&cid=#message_id#&lid=#list_id#&email=#email# Send Comments & Questions Dale Miller, Editor, National Hog Farmer, mailto:dale.miller@penton.com Penton Media | 249 W. 17th Street | New York, NY 10011 Copyright 2009, 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.