Mexico is leading the charge on U.S. Pork Export Sales, this year up 30% :

• 2020 = 422,502 MT
• 2021= 548,595 MT

A whopping 140,000 plus tonnes year to date with most of the increase in Mexico exports coming since May.

We expect the weekly China sale might be an outlier as China is currently awash in pork. It is important to watch China's pork imports going forward. Germany can’t export to China due to ASF. Many packing plants in Canada, EU, Brazil delisted for pork export to China. U.S. plants are almost all eligible to ship.

European Union

Pig Prices still languishing in European Union. In Germany (world’s fourth-largest hog producer) latest early wean pig price 11.6 Euros ($13.50), 25 kg feeder pigs 18 Euros (55 lbs. $21), cull sows 0.5 Euros a kg (26¢ lb.), market hog 1.20 Euro kg carcass (63¢ lb.).

ASF, beginning a year ago in September, has hammered the German market. Pig prices have been below breakeven for most months. Today, with high feed prices, losses are in the $40-50 range per head. The sow price is the lowest we can find in the previous years. A real sign of sow liquidation.

Germany buys millions of small pigs annually from Denmark and the Netherlands (about 15 million). The low small pig price is hitting those countries hard. We would not be surprised to see the EU sow herd down 500,000 to 1 million by the time industry recovers. This will mean less total pork production. The question is where will the lower values of pork be sold? We expect to highest bidder, whether domestic or export.

China

The China Ministry of Agriculture monitors production costs on swine farms. Their September report for large-scale farms shows the cost per pig raised at 2,398 RMB ($374 U.S. per head). Ministry of Agriculture estimates a loss of 668 RMB per head in September ($104 per head).

Certainly, the cost to raise a pig in China of $374 per head makes you wonder how China capitalists won’t be motivated to import pork in the future as China's hog supply declines.

Some reports from China speak of continued production increase ongoing. We will be contrary that no swine industry expands in the face of daunting losses. Producers run out of cash with losses well over $100 per head. USDA in August projects 14% less pork produced in China in 2022 vs. 2021. We expect the hog prices that have been worse the last two months to have moved the number to 20%.

The reality will be the market price. China's hog price has jumped from a low of 12 RMB kg a few weeks ago to 16 RMB kg. We work on the premise nobody pays more than they have to. Why would price jump 35% in a few weeks other than less supply? We expect China's Hog Price to increase above 25 RMB kg in 2022 ($1.77 U.S. liveweight lb.). Breakeven is about 20 RMB/kg ($1.40 U.S. liveweight lb.). At 16 RMB/kg current loss per head is about $75 USD. Not exactly good times all around. The history of hog production losses lead to liquidation, always has, always will.

Pork Taste

We strongly believe, to grow our industry we need to produce pork that gives consumers a great eating experience. Lately, Genesus has been involved in multiple taste tests around the world. We win at a Tom Brady type regularity. Some in our industry think “Duroc” is the answer. Partially true, but there are Durocs in our industry that are too lean with little to no marbling and poor water holding capacity. They give no better eating experience as some of these “Durocs” are just synthetic breeds with traits similar to Piétrains or have Piétrain added. Producers being pushed to Durocs are finding slower growth, higher mortality, tail biting, flank biting, and getting no better pork to make an improved eating experience.

One company thinks changing a number on their pretend Duroc Boars and adding foreign genetics that they have a better Duroc. The results are coming. Slow growth, higher morality, ear-biting, tail biting, and pork quality on the bottom of many taste tests.

If we are going to grow our industry, we need to use Genetics that gives a better taste and eating experience. Consumers don’t care if it’s called Duroc, we expect 97% of consumers have no idea what a Duroc is. We need a consistent predictable better eating experience. Genesus has the world’s largest herd of real registered Durocs. We believe in Durocs but what the pork they produce is what matters, not what they are called.