14 June 2023

3 minute read

By: Jim Long

North America

This past week was the World Pork Expo in Des Moines, Iowa. Our report:

• Seemed to be less people there than last year.
• As you would expect the reality of ongoing negative margins dampened enthusiasm.
• Producers are tired of the losing situation as it's grinding down equity and cash.
• Many asked when will it get better. It's almost at a point that even the most diehard optimists are discouraged. The real pessimists probably didn't come to the Expo.
• The World Pork Expo as an event makes you wonder how the economics work when there are now in U.S. 40 producers with over 65% of pig production. Hundreds of exhibitors to chase ever fewer producers each and every year.
• Like every Expo always discussion on crop advancement. Seems most say crop got in mostly good shape. Some areas need rain. Good rains, we will have a good crop and cheaper feed.
• In adversity there's opportunity. Met some Ukrainian pig producers at the Expo. They obviously have had adversity. There is lower hog production in the country from lost sow farms. Feed prices right now are very low. Profits are around $100 U.S. per head. Could be currently the most profitable country in the world for hog production.
• At the Expo lots of talk about Prop 12. Certainly, some believe NNPC didn't do a good job stopping it from moving forward. Many producers wonder what will happen. Big cost to convert and combine with the lost production associated with it. Who's got the money and will to convert? Range we heard needed for Prop 12 production costs increase $6-13 per head.
• Sow herd liquidation is underway. We believe it will be 300,000 sows when the dust settles. Nothing at the Expo we heard would make us change our thought on this. 2024 will have a lot less hogs.
• Cash hogs are trading higher on Thursday many hogs in mid 90s. A lot better than 70 but still not good enough.
• Had to laugh when the leading genetics company in sow mortality and prolapses uses the word robust to describe their sows at their exhibit. Robust must mean something different in European countries than in North America.
• Some producers wonder if when there will be fewer slaughter plants when hog numbers decrease. Good question certainly we don't know but significantly less hogs means less shackle space needed. There is no worry near term for shackle space availability.
• Seems more than enough PRRS breaks conversations. Not sure it's more than normal but it hasn't gone away. Wean to finish mortality is at historic highs. Combination of several factors probably disease, stockmanship, weak genetics, etc. When someone asks how you lower wean to finish mortality by 5% you know you aren't starting at 5%.
• Several conversations at Expo on what we need to do to improve pork demand. Most recognized the price difference between beef (last Friday choice cut-outs $3.32 lb.) vs. pork (last Friday cut-outs 88.39¢ lb.) – a $2.24 spread. It’s a huge difference. All surveys say taste is the number one driver in demand. Consumers obviously voting with their money for beef. Let's assume its taste driven.

Data indicates about 20% of U.S. hogs are minimum 3% marbling and 3 colour. That means 80% aren't a good eating experience. No way to build a brand and demand with so many inferior carcasses. We are glad Genesus full program Genetics Jersey Red Duroc x F-1 is 95% plus 3 – 3 plus.

As an industry if we could move cut-outs to half of beefs. Last week pork cut-out would be $1.65 lb. Maybe a reach but if we don't try, we will continue chasing our tails.

Below is fresh meat dog food being sold in a Hy-Vee store at $6.99 lb. Maybe we need to market pork as dog food because obviously, dogs will pay more.