Pork Commentary, November 29th, 2021
Jim Long, President-CEO, Genesus Inc.
The September 1st USDA Hogs and Pigs Report projected 1% fewer Hogs in the 120 lb. and over weight category. Actual slaughter has been less than the 1% projected. In our estimation, in the 90 days since September 1st the pigs over 120 lbs. should all be slaughtered.
Below official slaughter September-October – November not official yet.
2020 2021 September 10.655 10.419 October 11.644 10.746 2-month total 22.299 21.165 -5%
USDA projected 1% fewer hogs over 120 lbs. In the official slaughter report September to October 5% less. Over one million heads less. We do not have November data yet. We see that hog weights are 1-2 lbs higher currently than a year ago so that could explain the 1% difference.
The September 1st 120 lb. and lower USDA category is now upon us. This September 1st category is 6% lower year over year. We estimate that it takes about 90 days for these pigs to go to market (13 weeks).
The USDA report showed the following inventory:
USDA September 1st Report
50-119 lbs. under 50 lbs. Sept-Oct Actual Slaughter 2020 21,020 23,144 22.299 2021 19,751 21,855 21.165 Fewer Hogs Coming To Market -2.568
Our calculation if USDA is correct, could be about 2.568 million fewer hogs coming to market over the next 90 days (13 weeks).
Our farmer arithmetic: 2.568 million ÷ 13 weeks = 197 fewer hogs a week year over year.
Whatever the number is, if USDA even horseshoe close, we are seeing fewer hogs over the next few months year over year. No way that does not push pork cut-outs and hog prices higher.
- U.S. pork cut-outs closed last Friday at 83.98ȼ lb.
- U.S. Choice Beef Cut out closed Friday at $2.80 lb.
Beef Cut-out 3.5 times Pork Cut-out. Why? Consumers will pay more for beef. We will argue that consumers prefer the taste of beef. Taste matters. When will we help our profitability by producing what consumers want, a better eating experience? Some think it can be done by pretend Durocs with no better taste than cardboard-tasting Pietrains or their hybrid derivatives.
It is sad to see the missed opportunity. Our industry has to increase demand and margin by meeting consumers’ obvious taste preference and demand.
November 18th, European Pigmeat Committee released an inventory report from May-June. We have written about the financial losses in Europe cutting into sow inventory.
In the six months December 2020 to May-June 2021
E.U. Breeding sows
Dec 2020 10,148 May/June 2021 9,909 Difference 239
The E.U. breeding inventory decrease in the first 6 months of 2021 is estimated at 239,000 sows. We expect that with financial losses continuing from June through the rest of the year, there will be about 300,000 more sows gone.
Some of the major liquidation countries
Country Dec 2020 May-June 2021 Difference Germany 1714 1660 -54 France 1048 938 -110 Poland 830 748 -82 Romania 316 234 -82
Every day there are fewer sows in the EU. The sow price in Germany is 0.5 Euro a kg., the lowest in seven years, a reflection of sow slaughter. Small pigs and market hogs have low prices too.
Losses are being felt in almost all sectors. With ASF in Germany and Eastern Europe; as well as new environmental and animal welfare regulations, many producers see a dim future and are quitting.
Like every hog cycle, this one will run its course. When China renews larger pork imports because of its massive liquidation and with fewer hogs in the EU due to its own sow liquidation, prices will rebound nicely in 2022.
Gene Editing – GMO
We are receiving reports from China that the idea that approval of Gene-Edited (GMO) pigs (PRRS resistant) is in the offing is far from reaching a reality. It appears China Government is not interested in putting GMO pork into its food chain. GMO/Gene-Edited pork has a real issue with consumers’ acceptance.
As the Vice President of McDonald’s said at NPIC, “Don’t expect us to explain GMO/Gene Editing.” If there ever was a signal, don’t go what was it. When the world’s largest restaurant chain did one, far from elitist customer base, it is a warning that only the deaf and blind could miss.
Gene Editing/GMO death knell will be when a McDonald’s and/or a major packer announces all pork is and will be non-GMO/non-Gene-Editing. Regulatory approval won’t even matter at that time. It is over as most restaurant chains, retailers would fall over themselves to announce only non-GMO/ Non-Gene-Editing.
Instead as an industry, we need to work on the natural genetic selection of disease resistance to cut mortality.
The rabbit hole of Gene Editing-GMO has been a pipe dream of a public corporation owned by ventures and invested funds ran by people who never have bread a pig, farrowed a pig, or raised a pig. Sometimes what is best for the interest of an industry is not aligned with the interest of Washington lobbyists and directors/shareholders in a plush boardroom.
The bottom line: producing pork that consumers could be afraid to eat is not good marketing, it could destroy prices from cratering demand. Let’s hope a major retailer-packer-restaurant chain takes a stand to stop this path to industry suicide.
What do you think the majority of answers would be to this question asking a mother with young children “Would you purchase GMO/Gene-Edited Pork for your Children”?