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Pork Commentary: Market Struggles Continue

by 5m Editor
7 July 2009, at 10:39am

CANADA - This week's North American Pork Commentary from Jim Long.

We keep losing money. It is no fun. Attrition is wearing us all out. July hog prices under 60 cent lean, no one saw this coming. Early weans under $10.00. The result is there will be less hogs, the combination of the corn ethanol insanity, H1N1 (swine flu), all tied to a global financial meltdown is a Molotov cocktail of destruction for our industry. It is destroying many good families destiny.

Some other Observations

  • Finally we got some break on slaughter weights. Iowa-Minnesota barrow and gilts dropped 3.6 pounds week over week (268.7 to 265.1). The first hot weather and weights dropped. The weight drop, despite 100,000 fewer market hogs for the week compared to a year ago. Less hogs, big weight drop. Positive if we have more empty finish barns than a year ago. Weights and numbers should come down.

  • USA sow slaughter was just over 65,000 for the week according to the latest data. That is a liquidation number in our opinion.

  • Reports in Canada indicate a possible Government program to fund sow purchases. Possibly better than the previous program with greater funding. Participants have to leave barns empty. Too bad the USA Government can’t figure out similar programs. They seem to figure out how to subsidize corn ethanol, and car companies. In the end, all the money goes to the creditors. We are surprised the US banks don’t lobby hard for this. Last week there was a rally in Toronto at the legislature of approximately 300 producers looking for Government support for the industry. We understand that no Ontario Pork Marketing Board representatives attended. This shows their insensitivity and disconnect from reality. One rally attendee told us it was Friday afternoon and Pork Board employees don’t work Friday’s in the summer. It is sad when they collect $7 million plus a year to represent Ontario’s producers and they are mostly useless. We deserve better.

  • Pork exports need to get better. We expect ham exports to Mexico will be improving. Slaughter hogs are currently about 18 peso per kilogram in Mexico or about 60 cents US live weight per pound. This is a reflection of restored confidence by Mexican consumers in pork and their economy after H1N1 (swine flu) debacle. More pork will go to Mexico now and in the future.

  • Memo to the Saskatchewan Government: If Canada’s Federal Government offers sow buyout, use it for Big (Fat) Sky Farms – the world’s largest government owned hog farm. No government should own hogs in a free enterprise system. It is immoral and damaging to taxpaying family owned hog farms. You don’t need to own 50,000 sows, there are enough hogs in Canada. Save the taxpayers of your province from the sinkhole created by your socialist predecessors.

  • Corn dropped about 40 cents per bushel last week. That is positive. Amazing that all the wizards of prediction were out almost 3 million acres compared to what the USDA came out with last Tuesday. Livestock obviously benefits from cheaper corn. All we need is $40.00 oil and let’s watch corn ethanol producers bleed like us.

  • Jackson’s death has taken over the media. Swine flu has dropped to the back burner for the talking heads. Too bad it takes someone’s death to give us a break.

  • As we write we are in the Chicago airport on our way to Russia. We will report next week our observations. Fortunately, Russia has decided to open up more US states and Canadian provinces for imported pork. This can’t be soon enough.

Summary

Slaughter weights are dropping fast, slaughter numbers are coming down. The pain has been widespread. We need lower production, domestic and export demand. It will come. The billion dollar question is when. Probably when no one expects!!