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Pork Commentary: Pork Demand Phenomenal

by 5m Editor
26 October 2011, at 9:00am

US & RUSSIA - This week, Jim Long compares the health of the pork and chicken industries in the US and states that Russia is very short of meeting its domestic pork needs.

A year ago, US 53 to 54 per cent lean hogs were 68.81 per pound. Last week, they were 94.71 per pound that is about $35.00 per head higher than a year ago. $35.00 per head despite a US weekly marketing of 2.323 million, just 18,000 head lower than the same week a year ago.

The big difference is DEMAND!

World price points for pork is pulling product. China at US$1.31 live weight a pound, Russia at $1.30 and South Korea at $1.75 are all tremendously price-supporting for the North America market as exports roll there.

US pork exports will now get a further boost as last Friday Mexico agreed to end all tariffs on US pork, which had been put in place as retaliation over US trucking policies. Mexico is the US's second largest export market for pork with almost $1 billion in exports in 2010. No duties or tariffs will make US pork even more competitive in Mexico which should be price supportive for US hog prices.

Tough times for chicken

Last week, Cagles Inc., a poultry integrator based in Atlanta Georgia, filed for Chapter 11 bankruptcy. They produced 1.72 million chickens a week. Surprise! Surprise! They cited 'high corn prices and low chicken prices' resulting in they reported to 'losing as much as $3 million a month'.

US chick placements were down 12 million last week year-over-year. Despite this, 12-city chickens at $75.60 per pound are four cents a pound lower than a year ago. Think of pork demand: the same amount of hogs as a year ago but $35.00 per head better prices. Chicken has significantly fewer numbers and lower prices. Throw in higher feed prices and it is little wonder chicken companies are losing big time. Pork has demand. Chicken is sucking air. Has the world hit the saturation on how much chicken it can eat and is ready to pay for? Sure are glad we got rid of the 'Other White Meat' slogan. Red meat is king!?

Russia

This past week, we were fortunate to attend the Canada–Russia Livestock meetings in Moscow, continues Mr Long. The meetings were led by Canada's Ag Minister, Gerry Ritz, and Russia's First Deputy Prime Minister Zubkov. Genesus is the largest exporter of swine genetics from North America to Russia with 18 plane loads sent and being sent over the next few months.

Russia was thanked at the meetings by Minister Ritz for extending current veterinary export certificates – some of the toughest import health requirements in the world.

Russia, with live hog prices at US$1.30 per pound live weight, is obviously very short of meeting their own domestic pork needs. The industry is attempting to expand but limited capital and expertise makes expansion very slow. It will be a decade before Russia comes close to meet its domestic demand.

Summary

US pork demand is historically strong, with prices in the 90s and weekly marketings over 2.3 million. Thank goodness with $6.00 plus corn; if we did not have strong prices, we would be the chicken industry – losing money at a rapid rate. Chapter 11 bankruptcy is not sign of prosperity.