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Pork Commentary: If Misery Loves Company, We Have Lots of Friends

by 5m Editor
7 August 2009, at 12:04pm

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

The implosion in our industry continues. Prices continue to plummet with little optimism in the market place. If misery loves company – we’ve got it covered. Hourly, we hear of producers trying to stay afloat. Has it ever been worse? Probably not!

Other Observations

Usually at this time of year finisher barns are all full. Every old relic of a barn has hogs. Some barns are double stocked. If ever finisher barn inventory is reaching its zenith – it's this time of year. Not this year. Lots of barns are empty. Finisher barn contract prices are dropping to $25.00 per head space. A true reflection of supply and demand.

This summer there is no question it has been cooler than normal. Crops in many parts of the continent are two weeks behind maturation. The same reason crops are behind is why hogs are growing faster over the last nine weeks (June–July). What if hogs are four days ahead of a year ago due to growth rate? Four days is about one million hogs of growth. If somehow we had marketed one million less hogs over the last couple of months, what would that have done to the prices and market psychology other than push them up. What is the growth in your own barns? Have they ever been better in the summer?

There is more empty finisher space than a year ago. There is no debate, this is despite heavier hogs. If hogs were four pounds lighter, that would be about 600,000 more empty spaces. How many empty or not full finishers where you live? You only kill them once. One of these days the dog is going to hit the end of the chain. This is not soon enough for many.

Packers are making money now. That's good. Not long ago, packers and producers were losing money. We need to have a packing industry that can pay us. Packers need to have the cash flow to be aggressive marketers of our product domestically and internationally. Packers who are making money also have the confidence to own product and be hopefully less apt to dump product which just weakens the whole pork sector.

Mexico

We just returned from Mexico. Hog prices are 65 cents U.S. a pound live weight. Producers are making money. High feed prices over the last 15 months and then the swine debacle has cut Mexico's sow herd. A couple of years ago Mexico's sow herd was estimated to be one million sows. (There are no official statistics.) Now, some industry observers estimate that the Mexican inventory at 650,000 sows – a decrease of 35 per cent or 350,000 sows. That's probably why hogs in Mexico are 19.5 peso a kilo (65 cents US liveweight per pound) despite a US market $50.00 per head less and an open border for pork imports.

The decrease in sows has not hit fully the market place. As an industry for the most part, we market hogs from a sow inventory ten months prior to market hog shipment (biology). As sow inventories decrease there is a lag time. Mexico like Canada and the United States will have less hogs in the future. It sometimes baffles us why people forget the ten month lag. Sows do not just leave and all their offspring disappear.

Swine flu hit the Mexican market hard. For the first two to three weeks after the swine flu break, there was virtually no market for hogs as consumers stopped buying pork. Demand has started to recover but some packers are still running 50 per cent of capacity. Sixty-five65 cent hogs are a reflection of lack of supply versus demand. It would be our opinion as the H1N1 (unfortunately termed swine flu) threat diminishes pork demand in Mexico – and everywhere else will increase while supply declines. 65 cents now in Mexico. There is a lot of upside to Mexico's domestic prices and more pork export opportunities for US and Canada Packers.

Andean Countries

Before Mexico we attended Agroexpo, a trade show in Bogota, Colombia. There were visitors from the Andean countries of Colombia, Venezuela and Ecuador.

Colombian producers are making about $15 to $20 per head (65 cents U.S. per pound). There has been liquidation, swine flu has been a factor. High feed prices also impacted the industry. Poor pork demand. There is little advanced genetics in the country. Health regulations have kept the country behind genetically. The isolationist policy on swine genetics due to health barriers is keeping producers cost of production higher and globally less competitive.

In Venezuela, producers are making about $30 to $40 per head. Since swine flu, all pork and live hogs from other countries are banned. In the last year, there had been liquidation of the sow herd due to high feed prices and general economic issues. The surviving producers are currently in a profitable position. The trade bar seems bizarre when a government based on socialistic principles of ensuring a higher standard of living for the working class is not trying to improve industry productivity and meat protein availability for domestic consumption. It sounds like a contradiction to us.

Good Hope Farms with No.1 Award in the Canadian Pork Industry

Maple Leaf Foods, Canada's largest meat company, at their annual producer banquet on 15 July 2009, recognised long time Genesus customer, Good Hope Farms with No. 1 Award in the Canadian Pork Industry.

Best Carcass for a Calendar Year at Maple Leaf Foods means Best Carcass out of 4.43 million market hogs that Maple Leaf processes per year at their Brandon Manitoba Plant.

Good Hope Farms results obtained for 12 months (2008-2009):

  • Average carcass weight: 93.21 kgs (257 lbs livewt)
  • Average backfat: 14.6 mm (0.57 inches)
  • Average loin depth: 63.5 mm (2.48 inches)
  • Average lean meat percentage: 62.38 per cent

(No Paylean was used, although available)

Genesus congratulates Good Hope Farms for these Award winning results. Genesus Duroc boars and F1 Yorkshire/Landrace females generated this winning data. Genesus continues to set record setting results with the world's most productive genetic programme.