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Pork Commentary: Corn Ethanol Suffers Setback

by 5m Editor
13 July 2011, at 10:29am

US - This week, Jim Long comments on the US market.

Last week the US Senate voted to recall the Volumetric Ethanol Tax Credit at the current level of 45 cents per gallon and a 54 cent tariff on imported ethanol. The intention is for it to end on 31 July.

The Corn Ethanol apologizers appear to realize the ruse is up. They are painting a picture of a mature industry that no longer needs the subsidy or tariff protection.

Good Try Cowboys!! Corn Ethanol has been getting subsidized at $6 billion a year. That’s a big hole to fill.

The corn ethanol apologists complain about alleged subsidies for the oil and gas industry. Too bad as if hog producers have been getting subsidized to compete with $6 billion from the US treasury. Hog producers actually feed people. Oil doesn’t, natural gas doesn’t, solar doesn’t, and windmills don’t. Keep corn for food not SUVs!!

The next step as corn ethanol loses its aura will be eliminating the legal mandates forcing ethanol into fuel. It’s morally, socially, and economically wrong to burn our food. The insanity of corn ethanol has had a setback but the battle is far from over.

Pfizer to sell Animal Health Division

Pfizer, the world’s biggest drug maker and developer of the chemical castration vaccine – Improvac announced last week their intention to sell its animal health and baby food division.

One analyst put a value of $22 billion on the Pfizer two divisions. Probably a good idea for Pfizer to get out, with an animal health division that has invested heavily in the foolish Improvac vaccine for chemical castration. The top management must wonder where the leadership of the animal health division is going. Science with no common sense in regards to consumer acceptance is a gamble for any corporation. Pfizer Animal Health Management betting on the chemical castration vaccine demonstrates an ignorance of hog producers, packers, processers, retails, and consumers. Improvac does nothing for anyone including Pfizer shareholders.

Markets

The hog market played defense last week losing ground every day. Weekly marketing’s were 1.730 million. This past week’s holiday was not good for producers as fewer hours for slaughter plants take the edge off the pull for hogs. We expect a full week slaughter schedule will pull hogs higher. Last Friday Iowa – Minnesota was 92.66 lean per pound.

In the coming weeks we expect slaughter weights will continue their decline lowering pork supply. We see continued strength in US – Canada pork exports with global hog market prices in China, Russia, South Korea, Japan, Mexico, etc... at price points significantly stronger than USA – Canada. The US beef prices are $1.80 carcass per pound reflecting its supply – demand. Pork is half of beefs price which obviously keeps pork competitive for domestic and export markets. The US chicken industry has cut back egg sets and chick placements up to 6 per cent lower than a year ago.

Summary

Less beef, less chicken, no more pork and strong export demand will keep lean hog prices high. The downside high feed prices but fortunately the corn ethanol industry got a whack this past week.

Thank goodness we produce the most popular meat in the world and global demand is growing.