Pork Commentary, August 16th, 2021
Jim Long, President-CEO, Genesus Inc.
The last few days we have read commentaries from pundits and future trading houses of big concern on pork demand. This is of course due to some of their vested interest to drive down lean hog futures. Doubt anyone of them has ever owned a hog or ever will.
We are glad to point out that last Friday, U.S. Pork cut-outs closed at $125.68. To us, the cut-outs reflect Pork demand here and now. If a year ago we wrote that Pork cut-outs would be $125.68 a year later it would have been called delusional (a year ago August lean hog futures 74.10). To us, Pork demand is currently solid and we see it continuing. Pox on the house of the vested interest’s intent on destroying better pricing for producers.
Hog slaughter continues to run well below USDA June 1 projections of 2% fewer hogs. Last week 6% less year over year, since first part of July slaughter close to -10%. Doubt anyone not shipping any market-ready hogs as we move into lower fall price market. We aren’t raising pets.
Hog Market in Europe
The hog market in Europe has its issues. High feed costs coupled with large volumes of Pork due to slow down in China Exports have decreased hog price in Spain, from a historic high in June of 1.55 Euro/kg liveweight (90¢ U.S. lb.) to 1.26 Euro/kg (68¢ U.S. lb.) last week. The Netherlands, in the same time frame, has gone from 1.21 Euro/kg liveweight (66¢ U.S. lb.) to 1.02 Euro/kg (55¢ U.S. lb.) last week. Danish 30 kg (66 lbs.) feeder pigs are 35 Euros ($42.64 U.S.)
Many producers will be losing money, with corn at 221 Euro a ton ($7.57 U.S. bushel) and imported soy meal 413 Euro a ton ($495 U.S. ton).
Currently, the Dutch government is paying for swine producers to leave the industry. We expect significant liquidation over the coming months in the Netherlands and Germany.
August Crop Report
USDA came out with its August Crop Report last week with big Corn acreage states of Iowa, Illinois, and Nebraska showing projected yield increases year over year. Of the top 10 producing, all are up in Corn and Soybean yields year over year other than Minnesota and South Dakota. Not sure why report was considered bullish when national projected average yield is second highest in history.
Cost of Sow Mortality
Last week we wrote about the cost estimation by Ron Ketchum, a founder of Swine Management Services, that a dead sow was $996 – $1275. Huge number and it’s a challenge for our industry. Quarter 2 2021 Meta Farms Database has average sow mortality 14.2%. We believe there is difference in swine genetics. Genesus average sow mortality in 2020 of all North American producers we have data was 4.36%. Big difference. As one competitor said, that isn’t a fair comparison because Genesus has better producers. Now that’s a comeback? Probably a certain Genetics Company should be less focused on going down the rabbit hole of GMO – Gene Editing and realize structure – temperament is a huge part of sow liveability. Dead sows cost big money as Mr. Ketchum calculates.
CFAP 1 Top-Up
Last week the Senators of Iowa and Minnesota sent a letter to Secretary of Agriculture Vilsack asking why CFAP 1 payments promised to swine producers had not been paid. This is good, we need to keep pressure on Senators, Congressmen, and Secretary Vilsack. The CFAP 1 top-up payments promised by Government have been paid to Dairy, Crop, and Cattle producers ($ billions). Why hasn’t the $17 per head promised been paid to swine producers? Are we second-class citizens, a second-class industry?
The CFAP payments were to compensate for damages producers of the food chain had incurred due to Covid. We kept producing as an industry, we had billions in losses. It is our right to be treated fairly as promised. Keep the pressure on, it works, do you think the Senators would have got engaged if weren’t reaching out? Keep contacting, it works.
Some have asked where is NPPC in all this. They are ones paid to represent our industry in Washington. Unfortunately, the Executives leadership of NPPC is wanting. It’s time for NPPC Directors to drain the swamp in Washington. We need new leadership that can get something done.
Below are some comments from our readers regarding CFAP 1 payments:
“I think the first question you should be asking yourselves is if the program said it was going to give out $11 or $13 per pig to the guys that actually own the pigs first, why didn’t we all get that? The people that actually pay you. If you look at the money allocated in that bill for swine was the lowest percentage-wise paid out of any other commodity.”
“Jim, thank you again for all you do, as an independent producer please stay on the CFAP trail. I too have been wondering what happened to it, grain guys have 6.50 corn and got 20.00 per acre.”
“Great write up Jim! Very refreshing to see someone preaching the truth to our producers, especially when it comes to the NPPC. Thanks for sending this out!”
“Jim, Thank you for keeping us informed on this. That top-off payment can most definitely help out! Appreciate your direction on this.”
“Appreciate your bringing this up. Don’t let it go. I’ve contacted my reps but no response so far. Don’t expect NPPC to step up – the CFAP payment cap penalizes their strongest supporters – mega-producers. NPPC has no incentive to go to bat for small/medium-sized producers which is who would benefit most from the additional CFAP 1 payment.”
“U speak the truth. Yes, beef and dairy both got well over a billion a piece in the last round and had their money 4 months ago. We had as good of a downtrodden scenario as anyone in Dec and Jan when this was put together. We should of gotten 1 billion-plus of the euthanization money we get now. What a wasted opportunity!!!!!!!”
Had one negative comment from an NPPC apologist and part of their bureaucracy:
“Why don’t you pick up the phone and call Neil instead of bashing him and NPPC? Complainers don’t accomplish very much. Why don’t you be a team player?”
Letter written to the USDA by a reader:
“USDA -VILSACK: As a small family hog farmers we are asking why the TOP-UP payments have been paid to cattle and grain farmers BUT not to hog farmers. Covid, plus the slow down of chain speeds which has not be challenged by the USDA has seen our contract with Hormel terminated next month. We have been with them in good standings for 12 years but the slowdown will affect 500,000 hogs they won’t buy. They also said their accident records have gone down NOT up like has been written.
Equality?Equity? Payment being held with no valid reasons. You’ve had 7 months now, step-up and support family hog producers!!! It is not playing well out here in the country. Period!”