March 2011 pork exports increased 40 per cent compared to a year ago. 29.4 per cent of US pork production was exported in March. Thank goodness without these strong exports and with the current price of feed, the industry would have had huge financial losses. It is estimated that pork exports in March added an equivalent value of $56.22 per head. We are always suspect of these types of calculations but it’s safe to say at even 50 per cent of a $56.22 per head value it’s a lot of money and benefit to our industry.

Since November we have been predicting huge exports of pork to South Korea. In March South Korea took 41,190 metric tons of US pork valued at$94.6 million (four times higher than March 2010). Korea’s foot and mouth disease has been devastating with 350,000 sows and their entire inventory has been buried. It will take over a year for production to recover. Korea’s market hogs are hovering around $500 per head (no wonder we can sell them pork)! Our company Genesus as the largest registered breeding stock supplier to South Korea has seen the devastation. Currently Genesus has five plane loads of breeding stock flying to South Korea in the next few weeks. We expect record amounts of US pork will go to South Korea for many months to come.

• Japan in March is up 31.7 per cent in value, the US has 46 per cent of Japan’s import market.
• Mexico March exports up 4 per cent in value.
• China – Hong Kong is up 31.4 per cent to $47.5 million.
• Russia March doubles March last year at 4.863 metric tons.

Bottom Line

US pork exports are strong in all markets as the global economy gets a little stronger and the US has the lowest hog prices in the world(except sometimes Canada), we expect pork exports to stay strong or get stronger. The US hog industry has volume, quality, and capital to supply and develop export markets. This advantage will continue to bring value and returns to the US producer.

Expansion

We don’t believe there will be net expansion of the US – Canada sow herd any time soon. A hog to corn ratio of 12 to 1 reflects no profitability. Cash early weans prices in the $20 per head range means those producers are losing money ($20 per head less). There is never an inducement to expand. Concern for the grain prices hard to get capital, hard to get labour are all factors contributing to a scenario that will not head to net expansion.

South Asia

Last week Genesus had visitors from South East Asia. They are receiving $200 for a 220 pound hog with break evens near $150 or about a $50 per head profit. Feed prices are high and volatile there with significant pig disease challenges. Labour is inexpensive and plentiful. Capital is hard to come by. There consumers like pork and want more. 46 per cent of all meat eaten in the world is pork.

Floods in Manitoba

The US has the Mississippi river flood; Canada has the Manitoba Assiniboine River flood. The Manitoba flood is close to home. Last week we watched our Manitoba office sand bagged, earth movers building berms and 100s of soldiers deployed to prepare where our office is for the onslaught of water.

Our Manitoba office is in a small rural town called Oakville of about 1000 people. The Government in their wisdom has decided to flood the rural farmland to save larger towns in Manitoba by breaking a levee. Unfortunately as the government says there will be “collateral damage“.

One of our Genesus manager’s houses is in the planned flood area. It was a heartfelt observation when 60 neighbours and friends arrived unannounced at their house to sandbag, remove furniture, and generally help get as ready as they could. It reflects the nature of rural society that people rally and help their neighbours. It’s a culture we should be proud of.

There are many good people in this world.

Russia

This week we will be at Viv – Moscow and visiting customers. We will report our observations on Russia in next week’s commentary.