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Pork Commentary: Banff Pork Seminar

by 5m Editor
23 January 2007, at 10:36am

CANADA - This weeks North American Pork Commentary from Jim Long.

Went to the 36th annual Banff Pork Seminar this last week held in Banff, Alberta. It was our first time in either Banff or Alberta. Approximately 800 people registered for the event.

Some Observations:

  • The town of Banff is in a national park, nestled in the Canadian Rockies. It is an extraordinary setting.
  • The seminars stretch over three days and focus mostly on production issues.
  • At the event, we heard from several producers and veterinarians that the circo-virus vaccines are effective. Better on the small pig inoculation than the sow program. One large Quebec-based producer characterized the results in their operation as a ‘miracle’ and that half a dose administration was working for them. We understand that the supply of circo vaccine is becoming better.
  • The demand for small pigs for importation the US remains strong. Several US entities were trolling the event, looking for pig sources.
  • One Albertan producer told us that the current gross revenue difference between Alberta and Iowa is $18.00 per head for market hogs. He wondered how long such a disparity could remain without production implications.
  • The Deputy Premier of the province of Saskatchewan spoke about government agriculture policies. He was really, really boring. It was hard to stay awake. Suggest that he is never asked back.
  • One of the major topics of discussion was $4.00 corn. One ag-economist speaking said that the hog industry would not be profitable in 2007 due to feed cost increases and pork production expansion. We do not agree and question the economist’s credibility when he conjectured that ethanol by-product production would be so great that it might be railed to the ocean to be dumped to get rid of it. Corn by-product is currently not being discounted relative to its feed value.
  • A feed company executive speculated to US that corn could spike to $6.00 a bushel in 2007, and oil would get below $50.00 per barrel. This, he conjectured, would put ethanol plants uncompetitive as fuel sources. He expected several corn ethanol plants financial failures in the next three years. Obviously, $6.00 corn wouldn’t be good for the livestock industry either.
  • Another speaker showed the remarkable yield gains by corn hybrids over the last few years. He showed that barley yields have remained static. The lack of barley yield increases is limiting farm revenue. It was speculated that the lack of breeder patenting rights in barley and small grains is discouraging corporate research in barley seed. Barley yield increases would help the Canadian pork industry be competitive.
  • Brad Knudson of Cargill presented the following cost of production numbers for 2006 of various countries (farrow to finish)

If Knudson’s cost of production numbers are right, Canada has a $14.00 per head cost disadvantage to the US. Seems too great to us but when coupled with lower hog prices, it is no wonder that Canada’s breeding herd in contracting. Knudson’s numbers show a cost difference of $30.00 per head between Mexico and the US. If you look at Japan’s cost of production that is $150.00 per head higher that the US, its no wonder that they import pork.

Knudson presented data from Agrinetics Associates Monitoring Services of wean to finish pigs (6 to 119 kgs). The data indicated feed conversions have improved from 2.8 to 1 in 1995, to 2.51 to 1 in 2006. This is probably due to a combination of better feed and genetics. Feed efficiency is going to be a much greater driver of business decisions in the future.

Markets

A week ago, we projected the Iowa-Minnesota price (at the time 55.61) would reach 60¢ plus within two weeks. A week later and Iowa-Minnesota is 60.24. The holidays are over and full week marketings are strengthening prices. Hog weights are running 1.4 lbs lower than a year ago with last week’s US hog slaughter 1.5% lower than a year ago (2006-2.104 2007-2.073). Fewer hogs and lighter weights reflect hogs being pulled ahead. We do not expect Iowa-Minnesota hogs will be below 60¢ lean again before the fall of 2007. This week, we will be at the Iowa Pork Congress and next week report our observations.

5m Editor