Last week we attended the 40th annual Banff Pork Seminar held in the beautiful tourist town and National Park of Banff, Alberta, which is surrounded by the Rocky Mountains. The venue is a far cry from the normal places we have swine conferences.

Our Observations

• About 600 people attended the seminars. Most were from Canada, but there was also a strong contingent from the United States.
  
  
• Mood of the producers and industry participants could be best described as cautiously optimistic.
  
  
• Feed prices were the big topic of conversation. Fear of runaway feed costs is tempering all enthusiasm of future lean hog prices in the mid 90’s.
  
  
• We heard of no significant sow herd expansion. There are still many empty sow units in Canada, but for many reasons. Few, if any, appear to be restocking in the near future.
  
  
• Mark Greenwood, Vice President of Ag Star Bank in Minnesota (Farm Credit affiliate) spoke and said that currently in the US, 25,000 sow farrow-to-wean units with a good bio-secure location are being valued at $800 per sow, while sow units in more disease prone areas are $400 per sow. He said that recently some 10 year old finishers were sold and brought more than $150 per finishing space, selling for more than they cost to build ten years ago.
  
  
• Ron Plain, an Ag Economist spoke. He projects the Iowa (USA) barrow-gilt price will range in the second and third quarters between 76 and 82 cents lean per pound. Considering the lean hog futures are averaging in the 90’s in the same time frame, we have to wonder if Mr Plain knows something that all the many in Chicago are not smart enough to see. Mr Plain’s projections reflect a price that is $25.00 per head less than what the futures project? On the other hand, we continue to believe lean hogs will reach $1.00 lean per pound this summer. June lean hog futures closed, as of Friday, at 97.52. A 2,500 sow producer commented to us after hearing Mr Plain, “Makes you want to sell the farm after listening to him!“
  
  
• We were in several discussions that involved higher weight grids from packers. A couple of speakers gave presentations on the economic considerations of higher weight hogs. It’s also becoming apparent that a couple of Dutch genetic companies selling in North America are having a difficult time with their hogs getting too fat at heavier weights. Short and fat doesn’t work at 280 pounds.
  
  
• We spoke to several bankers who attended the conference and you get the feeling they, like the rest of us, are marooned in the hog industry. The accounts they have, they have to manage, but bankers are not looking for new business and are far from optimistic. There will be little bank funded expansion until equity levels are replenished.
  
  
• We had the Genesus Reception last Tuesday night at Banff, with approximately 300 attendees. It was good to see so many customers and industry people having a good time.
  
  
• The foot and mouth disease in South Korea has been devastating. There are reports that an estimated 2.5 million pigs or about 15 per cent of Korea’s inventory has been eliminated. North American packers at the Banff Seminar told us that they were getting many calls for pork in South Korea. The need and demand for pork to replace what has been destroyed will lead to greater pork exports. This will be supportive of North American hog prices.

The Markets

• Several lean hog contracts reached life of contract highs last week – ie. June 97.525 and Oct 85.875.
  
  
• The ISM, last Friday averaged 74.59 on their way to 80 in February.
  
  
• Cash early weans averaged 59.10 while 40lb feeder pigs increased to an average of $78.10 (with highs of $83).
  
  
• The latest ISM weekly weights were 274.8lbs, down 1lb from the week before, still 4lbs heavier than the same week a year ago, but closer year over year than they have been in some time. We expect to see hogs move up when we see weights dropping because this, in itself, will show a more current hog inventory.

This week we will be at the Iowa Pork Congress and you can visit us at the Genesus booth. Wednesday, at 5pm, Genesus will host a beverage and appetizer reception at the Holiday Inn – across from the Convention Center. You are invited.

Next week’s commentary will give our observations of the Iowa Pork Congress.