Last week the U.S. National Carcass price averaged $122 lb. U.S. Pork Cut-outs closed Friday at $127.34 lb. reflecting good demand relative to supply. Other observations:
U.S. hog slaughter last week was 2,291,000, same week last year 2,313,000.Year to date U.S. slaughter is down 3.7%. Latest Iowa – S. Minnesota liveweights average 276.7 lbs. A year ago, same week 278.1 lbs. Lighter hogs year over year indicate a very current finishing inventory. This is positive in sustaining hog prices going into fall when seasonally hog prices decline.
Official June U.S. sow slaughter was 268,900, a year ago June was 269,100. Next to no difference. To the end of June U.S. sow slaughter is 70,000 less than a year ago. U.S. weekly sow slaughter is running current in the 60,000 head per week range. Last Friday 450-499 lb. sows averaged $76.17 with highs of 88¢. Last August sows averaged in the 300-499 lb. range were 85.38¢ lb. In our opinion sow slaughter in the 60,000 per week range indicates a breeding herd inventory with little change happening.
We have written over the last few months about the decline in Europe and the UK’s pig production. A recent report by Agriculture and Horticulture Development Board (AHDB) in regards to UK market highlights some of the following.
UK sow herd was 415,000 mid 2021 is now forecasted to be 350,000 now. A decline of 15%.
Expectation hog slaughter to be down 15% year over year second half of 2022.
Current UK hog prices are 193.09 GBX/kg – the highest ever recorded. Unfortunately, with high feed prices producers are still losing money. About £20 British pounds a market hog.
UK market and production levels going forward are in our opinion a snapshot of much of Europe. We expect European sow herd will decline 1 million sows from its numbers of 2021. Less hogs coming leads to even stronger prices.
European Commission just released slaughter data from January to April 2022 – 4 months. Year to date EU hog slaughter down 4.2% – tonnes of pork produced down 5%. Less hogs, less pork. No wonder hog prices have increased. We expect year over year monthly EU hog slaughter to move towards 10% lower.
The ability of Ukraine to get grain shipped through the Black Sea now that there is a deal with Russia still seems to have some doubts. We expect some degree of success, if it’s in Ukraine and Russia’s self-interest to get grain moving. Russia has huge grain crop. Ukraine has lots to move also. We expect the backed-up grain from last year’s crop and new crop will put pressure on global grain prices as it flows into marketplace.
Summary
U.S. hog prices stay strong with no sign of more pigs well into 2023. Europe prices at or near record levels with fewer hogs forecasted in the coming months. China prices have gained significantly (up $200 per head) since first of April. Less hogs in the U.S., Europe and China. Collectively 75% of world’s hog production. We expect World hog prices to be excellent in the coming months due to less supply.
China 22.73 RMB/kg = $1.52 U.S. liveweight a lb. x 280 lb. pig = $425. Current China isowean $98.
Spain – highest price in their history at 1.68 Euros/kg liveweight up from 1.02 Euros/kg at the end of January = increase of over $120 per head.
U.S. – China – Spain all hitting high prices at the same time is a reflection of global decline in hog production.
Other Observations
• China official inventory data indicates little or no liquidation. The price going from 85¢ lb. at the end of March to $1.52 lb. last week tells us there has been a huge collapse in production due to the financial losses in the billions. No one pays more than they have to.
• EU data shows Pork Production down 7% in latest month report – EU officials predicted 3%. We believe EU has liquidated about 10% of their sow herd.
• U.S. pork carcass cut-outs closed Friday at $125.74 lb. A sign of strong pork demand. Choice Beef carcass cut-outs are $2.68 lb. a reminder consumers will pay more for a better taste experience. Someday our industry will realize the holy grail of profitability is better tasting pork not some other production myths.
• The U.S. National price of $1.18 a lb. compares to $1.11 a lb. a year ago.
• September corn closed Friday at $5.64 a bushel. In mid-May September reached $7.78 a bushel. U.S. National avg cash corn closed Friday at $6.50 a bushel. In mid-June it was $8.00. Certainly, lower prices are positive for swine producers cost of production. Since mid-May the feed cost to finish a market hog compared to current has declined $20 per head. A significant amount.
• Last Friday a Turkish brokered deal was made with Russia and Ukraine to allow grain (wheat, corn, oilseeds) to be shipped from Black Sea ports. If successful this will put millions of tonnes of grain into world markets. Not only from Ukraine but it will facilitate Russian grain – fertilizer exports. Wheat dropped 47¢ a bushel on the news of the agreement. Wheat has declined $5.00 a bushel since mid-May. $12.68 to $7.59 last Friday. The lower wheat price helps Europe swine feed prices where wheat is used significantly more than North America.
• About a month ago 500-550 lb. U.S. sows were 50¢ lb. last week they averaged 70.2¢ lb. with highs of 83¢ lb. Sow slaughter the last few weeks has averaged over 60,000 head (other than July holiday week). Price hasn’t jumped from lack of sows in our opinion but demand
• PigCHAMP quarterly 2022 data from 273 farms indicates sow mortality continues to be high. Mean of 14.83%. The top 10% was 23.3%.
o In 2017 the mean was 10.73%. The top 10% was 15.5%.
o Seems the continued use of sows with leg, social and prolapse issues is continuing to lead to higher sow attrition. It’s a real cost when SMS – MetaFarms data indicates a dead sow has over a $1,000 per head loss. Farmer Arithmetic – sow mortality up 4%, 6 million sow inventory. An extra 240,000 dead sows a year in industry. Dead sows don’t produce pigs.
• Last week’s report had Iowa-S. Minnesota weights at 277.5 lbs. compared to 278.1 lbs. a year ago. First time in several months weights lower year over year. Tells us market hog sales very current.
Premise
U.S. – China – Europe down in production at same time has been our prediction. It appears this is correct. This will sustain strong hog prices.
U.S. inventory report in June indicated less pigs and sows from a year ago. That is our production until next summer. We believe at minimum prices the next twelve months will be the same as the last twelve months. Current Lean hog futures at a $1.00 next spring and summer are undervalued in our opinion. We currently have $1.18 national lean hog price average, why would it be any lower next year with less hogs in America, less hogs in China, less hogs in Europe? Its Farmer Arithmetic but we will bet it against the Algorithms.
Last week we attended the National Pork Industry Conference (NPIC) in Wisconsin Dells, Wisconsin at the Kalahari Resort. Our Report:
• Attendance was around 900 with a cross section of industry and producers.
• Genesus was a major sponsor. Sunday night Genesus hosted a reception attended by many.
• We had the honor to speak at the conference. Last week’s commentary covered the subjects we presented.
• NPIC was well organized as usual. The NPIC team does a professional conference in conjunction with Kalahari.
• Many people bring their families to Kalahari as it is a facility geared to family entertainment.
• One of the subjects well covered by several speakers was sustainability. It seems to be a new catchphrase for green, environment, carbons etc. Have to say we aren’t sure what is the answer for this in the pig industry. To us sustainable is making sure business is going forward.
• One speaker highlighted – Beef has nearly 30 more times CO2 per calorie than pork. Seems we are significantly ahead of the beef industry in carbon emissions. A good step ahead on what is termed sustainable.
Source: The EconomistSource: The Economist
The speakers on the economics of the pork industry were generally optimistic on hog prices the next coming months as U.S. hog supply continues to be low. No concern near term of packing capacity. Exports challenged by stronger U.S. dollar making pork more expensive for importing countries. All speakers spoke of lower hog supply in China and the opportunities for pork exports in future. Where feed prices are going can be described as a wildcard.
• Last week in our presentation we discussed the recent survey analysis by Iowa State University on consumer acceptance of gene-edited foods. We had several people discuss with us after.
o Iowa State is ag friendly
o Survey was 2,000 people across the U.S.
o Quote from survey “Around 60% of the women in the survey said they would be unwilling to eat and purposely avoid gene-edited food.”
• To be clear we support technology we aren’t against Gene-Editing as a science. Our concern is if 60% of women say they won’t eat, purchase or purposely avoid the product, what does that do to pork demand and pricing? We believe it will destroy our pricing and demand.
• It doesn’t take much to up end a market. Paylean (Ractopamine) was used across America and it was legal. No consumer had any concern. Everyone was going merrily along with it with no issue. Then China said no to Ractopamine (Paylean). It effectively became banned as all the industry fell over itself to stop using it. A one buyer (China), product gone.
What happens when a buyer says no to gene-edited? Whether it be a country or major retailer or food service?
• At a prior NPIC a Vice President of McDonald’s told everyone there “Don’t expect us to explain Gene-Editing.” When the largest restaurant chain in the world and one certainly not with elitist cliental gives the warning, we should pay attention. Our point before we rush head first into a world of gene-editing, all of us genetic companies, packers, foodservice, retailers, consumers need to look at this. Is this going to destroy demand and prices for the whole pork industry. Not much point producing pork that 60% “of the women in the survey said they would be unwilling to eat and purposely avoid gene-edited food.”
It’s the elephant in the room which as an industry we seem to be approaching like an ostrich sticking our head in the sand.
• Anyone who reads the commentary regularly is aware of our disappointment with the NPPC for the lack of a fight to get the CFAP 1 top up payments which was worth millions of dollars for our industry. One that every other major commodity got paid as promised, but swine producers didn’t. Promise made but not kept. We had a premise that senior bureaucrats at NPPC needed to move on. We needed fresh blood to fight for producers. Recently there has been several senior bureaucrats leave from NPPC. Bryan Humphreys has been appointed new CEO. Bryan spoke at NPIC and he gave in our opinion a blueprint of a new regime engaged to fight for and with producers. Afterwards we had the opportunity to speak with Bryan. It was a good conversation. As an American pork producer, we told Bryan we believe in the need of the NPPC. We appreciate the energy and new direction he is bringing to NPPC. As a pork producer we will fight with him alongside other producers to move our industry forward.
China Update
• In the first half of 2022, it is estimated that 14 Chinese publicly traded enterprises will lose more than 20 billion RMB ($3 billion U.S.). (These results do not include two of the biggest companies Wens and Zhengbang as they have not reported two quarters financials yet). These losses in the first 6 months of 2022 of $3 billion is on top of the over $6 billion lost in 2021. Let’s assume these 14 companies represent 15% of Chinese hog production. Pro rate the $9 billion lost by the 14 companies in 2021-2022 it would lead to an estimated $60 billion lost in the whole industry. Any wonder the China hog prices has increased every week due to fewer hogs over the last three months? Hog financial losses lead to less hogs. Always have and always will.
• We heard a report last week China has begun ordering pork from Canada and Europe. Not much from USA, but any pork leaving North America – Europe to China is positive for all exporting countries and price supporting.
China Prices
U.S. Dollar
Market Hogs – Liveweight lb.
35 lb. Feeder Pigs
March 18
85¢
$59.60
June 3
$1.09
$98.70
July 8
$1.50
$115.60
July 15
$1.54
$120.18
The relentless week upon week of China Price increase continues.
Our premise has been for the first time in history – China, Europe and North America will be down in production at the same time or about 75% plus of world’s pork production. It appears the premise is true.
NPIC
Jim Long President & CEO of Genesus gives a presentation on World MarketsSpencer Long of Genesus gives a presentation on the Genesus Jersey Red Duroc
Editor’s note: Kurt Preugschas is a swine veterinarian and owner of Precision Veterinary Services. He can be contacted at kurt@precisionvet.ca. The work featured in this article was initiated by Javier Bahamon, Quality Assurance and Production Manager, Alberta Pork. He can be contacted at javier.bahamon@albertapork.com.
Antimicrobials are sometimes necessary in hog production, but their use has come under the microscope in recent years, on account of limiting antimicrobial resistance.
Antimicrobials are natural or synthetic substances that can kill or block the growth of micro-organisms, including bacteria that can make livestock sick. Antimicrobials are a valuable tool for veterinarians and hog producers to support animal health, control diseases and ensure animal welfare is maintained.
While the positive effects of responsible antimicrobial use are known, the potentially harmful impacts to human health and the environment are being more closely considered these days by global authorities and stakeholders within the Canadian livestock industry. The ultimate concern with using antimicrobials in hog production is the development of antimicrobial resistance.
Starting in late 2017, Alberta Pork recruited Precision Veterinary Services to work with 20 Alberta hog producers – mostly farrow-to-finish operations – from all regions of the province on benchmarking their antimicrobial use. This project did not directly measure antimicrobial resistance, but it may be possible to extrapolate the notion that, the more antimicrobials are used, the more risk there is of developing antimicrobial resistance. While this relationship is not entirely straightforward in nature, measuring antimicrobial use can be a fairly simple way of monitoring and understanding the relative risks while making improvements.
Antimicrobial use trending downward
Use of Class 1 and 2 drugs decreased over the five-year study, while use of Class 3 and 4 drugs increased slightly.In-feed antimicrobials are most-common.
Prior to conducting the study, we suspected that antimicrobial use varied greatly from one farm to the next. Following the completion of the study, that was confirmed. However, the underlying positive reality is that antimicrobial use has been trending mostly downward. Over the five years assessed, there was a 43 per cent decrease of antimicrobials administered via injection, an 18 per cent decrease of antimicrobials administered through water, but an 11 per cent increase in antimicrobials administered in-feed. Overall, that represents a 13 per cent total decrease, moving lower as time goes on.
Heath Canada considers Class 1 antimicrobials as having ‘very high importance’ for human health. The 78 per cent drop in their use over only a handful of years is encouraging. The results suggest that Class 1 drugs are primarily being replaced by Class 3 alternatives, which are much less important for human medicine.
In 2018, Heath Canada mandated that all Class 1, 2 and 3 drugs for any use would have prescription status, available only from veterinarians and pharmacies. An example of a Class 1 drug used in the swine industry is ceftiofur – a pharmaceutical that treats infections in pigs, including bacterial pneumonia caused by Streptococcus suis. Examples like these have raised the level of concern over causing antimicrobial resistance and antimicrobial pollution in the environment.
This downward trend of antimicrobial use in Alberta hog production aligns with the goals of the Global Leaders Group on Antimicrobial Resistance, which was formed two years ago to tackle the problem. The group includes politicians, researchers and private sector representation from across the world, meeting quarterly to advise on prioritized actions to address the matter. Alberta hog producers, it seems, are on the right track in this regard.
Antimicrobials add potentially avoidable costs
In many cases, the antimicrobial cost per sow was three times greater for high-use farms compared to low-use farms.The average difference in antimicrobial cost per pig was more than $6 greater for high-use farms compared to low-use farms.
In today’s costly farming environment, anywhere money can be saved is a good thing for producers’ bottom lines. While proactive, up-front investments into herd management – such as the use of vaccines – cost more in the beginning, they can certainly pay off in the end. Antimicrobial use, on the other hand, is usually a reactive response to a problem that could ultimately be avoided or lessened.
Costing data collected as part of the study showed a considerable amount of savings for farms with low antimicrobial use. Given the assumption that 27 pigs are weaned per sow per year, a high-use farm with a 500-sow farrow-to-finish operation, as an example, could end up paying $80,000 more than a low-use farm of comparable size.
While hog prices are reaching their predictable summer peak, cost of production, likewise, is at an all-time high. Any advantage a producer can get is worth taking.
Biosecurity reduces the need for drugs
Automatic ventilation systems with ventilation curves can optimize the barn environment and reduce the need for antimicrobials.
Improving animal and human health, cleaning up the planet and saving money are all great, but how can antimicrobial use decline even more, from a practical perspective?
Biosecurity is fundamental to preventing livestock illness and disease in the first place. Internal biosecurity assessments were performed as part of this study to evaluate any correlation between the internal biosecurity practices of individual farms versus those farms’ levels of antimicrobial use.
In general, having a higher health status – less disease on-farm – is positive and reduces the need for antimicrobials to prevent negative animal welfare outcomes, but even lower health status farms – more disease on-farm – can still have low use rates. Interestingly, this study established no correlation between health status and the amount of antimicrobial use, meaning that management – not disease status – is a much larger factor in the equation.
When it comes to barn hygiene, most farms are doing a good job in the nursery and farrowing areas, but improved hygiene in the grower section was identified as the area with the most opportunity for reducing antimicrobial use. Ensuring ventilation curves are in place for all areas of the barn can help. Automated ventilation on its own is not enough, and, in fact, ventilation curves were observed as the difference between farms with high and low antimicrobial use.
Stabilizing a farm’s overall health is most critical for reducing the need for antimicrobials. Limiting the number of live animal entries into the barn and making simple changes such as not giving iron or antibiotics to piglets less than 24-hours-old can help further. This reinforces the value of producers working closely with their veterinarians to optimize disease prevention, control and treatment protocols.
Alberta hog producers continue to improve
Thanks to the cooperation of Alberta’s hog producers, the entire industry is benefitting from paying more attention to the judicious use of antimicrobials. Going forward, Alberta Pork is looking to secure additional funding to advance this research, with the hope of including even more producers and veterinarians. Similar studies from other parts of Canada are contributing to an even wider understanding of the issue, providing additional opportunities to collaborate and share knowledge.
From understanding how and how much antimicrobials are used on-farm, and by auditing internal biosecurity, farmers can not only operate their businesses cost-consciously but also work toward the noble goal of improving public trust in the industry, which supports everyone across the value chain, all the way down to domestic and international pork consumers.
An even better future for livestock health is within reach, as the industry commits to continual improvement in management practices for all aspects of production, including antimicrobial use.
When Russia invaded Ukraine earlier this year, many people around the world were appalled at the violence and atrocities. In Canada, the prevalence of Ukrainian identity differs from one region of the country to the next, but on some parts of the prairies, it is inescapable – a fundamental part of the cultural fabric.
Mundare is a town of nearly 1,000 people, located about 100 kilometres east of Edmonton – in the heart of ‘Kalyna Country’ – representing a collection of settlements and other heritage sites demonstrating the Ukrainian presence in east-central Alberta.
Among the most recognizable institutions of the area is Stawnichy’s Mundare Sausage – formerly known as ‘Stawnichy’s Meat Processing’ for many years. The company is recognized for offering many delicious meat products and Ukrainian heritage foods, with probably none more famous than the original smoked sausage ring. Served hot or cold, customers can find it at Stawnichy’s deli in Mundare, at their dual deli-and-restaurant space – Uncle Ed’s Restaurant and Mundare Sausage House – in Edmonton and at many grocery locations across the province. You might even come across it being sold for a minor hockey team fundraiser!
Small-town butcher shops are often held in high esteem by those who frequent them – family, friends and neighbours of those business owners. Stawnichy’s takes that a step farther, penetrating urban markets that have little to no association with Mundare, the town. Thanks to years of hard work and dedication to high quality, Stawnichy’s reputation today precedes it.
A little company with a big reach
Like many farm-based families, the Stawnichys have a large family tree, including company founder Ed Stawnichy. This has allowed the company to remain in the family’s hands and original location, while also expanding across the province.
Ed Stawnichy began processing meat products on the family farm, starting in 1959. Since then, four generations of his family have been involved in the operation, including Ed’s grandson, Kyler Zeleny, who plays a key role in directing the business.
“My gido [grandfather] always had core values for our company,” said Zeleny. “My baba [grandmother] still works in the shop six days a week, not because she needs the paycheque, but because she loves it.”
Zeleny grew up on a farm outside of Mundare and spent plenty of time at the shop over the years. Eventually, he left to pursue higher education, including a PhD, but has since returned to his rural roots.
“I started working in the shop as a teenager, but even when I was younger, it was a bit like the local daycare for us. At one point or another, we’ve had probably two dozen family members working in this company.”
For Zeleny, the success of Stawnichy’s is closely tied to Ukrainian identity and mentality.
“Early on, everyone here was Ukrainian. Those pioneers had the same instincts as ‘hustle culture’ today: you keep moving, you never put all your eggs in one basket, and you remain grateful.”
Diversification has always been an important strategy for Stawnichy’s to maintain its business.
“We keep our food simple and authentic, but we’re always trying to modernize where it makes sense. In the end, it’s still hearty, filling, homemade, family-style food. We’re looking at adding additional Ukrainian products to our lineup in addition to new non-Ukrainian products.”
Still, the sausage reigns supreme! Over six decades, millions of sausage rings have been smoked. If straightened, each ring measures about two feet in length, which means Stawnichy’s has smoked enough sausage to stretch all the way between Mundare and Kyiv, and then halfway back again. That would seem true-to-form for Ukrainians, whose idea of hospitality typically includes very generous portions of food.
“We’re privileged to have what we have. We’re truly fortunate.”
Modern times, timeless products
Stawnichy’s products are shown here at a grocery story in downtown Edmonton, prominently positioned in a meat department cooler.
Stawnichy’s does not have its own hog slaughter capacity, but the company does try to source its pork as locally as possible. Often, that means from abattoirs within Alberta but also from other parts of western Canada, when necessary.
“It’s difficult, because there aren’t as many suppliers out there as we would like,” said Zeleny. “I think we need better funding and opportunities for smaller facilities. That provides more options for producers and provides better food security for consumers.”
Stawnichy’s facility in Mundare is the site where virtually all of the company’s products are processed. The facility is part of the provincially inspected system, which means the company is unable to market products outside of Alberta; however, entering the federal system has crossed Zeleny’s mind.
“It’s possible within five or 10 years we would consider it. But I wonder, are we happy with our size? Do we need to get bigger? Growth upon growth isn’t something I believe in. It’s just not who we are.”
As time goes on, Stawnichy’s proliferation of the retail market continues to expand, with more than 190 stores in the province carrying their products. They recently underwent a rebranding of all their packaging, and they are considering the possibility of opening a new deli and restaurant in south Edmonton, to complement their northside location.
“COVID-19 changed things for sure. We had to close our restaurant in accordance with public health restrictions, and our fundraising efforts for local sports teams took a major hit. Like all businesses, we faced higher costs and reduced supplies, which has made it difficult.”
Unmotivated by the prospect of exponential growth and wealth for the family, Stawnichy’s makes a point of hiring local workers, but recently, two refugees from Ukraine were brought on board to work in meat cutting.
“We like to think we’re an integral part of our community and for those who choose to live here. We think small-town life is important. When two Ukrainians approached us not long ago, however, we hired them on the spot. It was a no-brainer.”
In addition to hiring Ukrainians, Stawnichy’s has pledged more than $10,000 directly in support of Ukraine, while also supporting the local community on an ongoing basis through the Edward E. Stawnichy Foundation, which provides scholarships to area high school students, along with funding other charitable initiatives for local residents.
“We’re happy to feed people and offer a product that has a lot of quality. We’ve been doing the same thing for more than 60 years, and we’re not cutting any corners.”
Mundare is monumental
Alberta is sometimes called ‘Canada’s Texas,’ affectionately or otherwise. In the case of monuments, the province certainly lives up to the creed of ‘everything is bigger.’
Just down the road from Mundare is Vegreville – a considerably larger town known for being home to the world’s largest ‘pysanka’ (Ukrainian Easter egg), made from aluminum tiles, constructed in 1975. You may recall seeing it on the front cover of the Spring 2022 edition of the Canadian Hog Journal, published this past May.
Not to be outdone, in 2001, Mundare erected an oversized fibreglass ring of ‘kovbasa’ (the cold-smoked sausage that made Stawnichy’s a household name). A third addition to the visible Ukrainian presence in the region includes a giant fibreglass perogy in the nearby town of Glendon, built in 1993. While these roadside attractions may seem like gimmicks, they are casual reminders that those communities still feel a loving connection to Ukraine.
“This is the mecca of Ukrainian culture outside of Ukraine,” said Zeleny. “The culture is still represented in the local arts, institutions, street signs, businesses, you name it. The cultural complexion has changed somewhat over the years, but the community still remains very Ukrainian.”
On the grounds of the Alberta Legislature in Edmonton, a copper statue commemorates the arrival of Ukrainian settlers in the province, in 1891, and on the grounds of the Saskatchewan Legislature in Regina, another statue serves as a reminder of the Holodomor: the intentional starvation of more than three million Ukrainians in the Soviet Union, between 1932 and 1933.
Clearly, in good times and bad, feast and famine are inevitable defining features of being Ukrainian, and the connection extends from all over Canada all the way back to the homeland.
Food unites us all
Whether eating in or taking out, Uncle Ed’s in Edmonton is home to some of the city’s best Ukrainian fare. Good food is central to many things Ukrainian and Canadian.
In a 2010 interview with Slate magazine, Anthony Bourdain – the late chef, travel writer and TV host – said, “Food is everything we are. It’s an extension of nationalist feeling, ethnic feeling, your personal history, your province, your region, your tribe, your grandma. It’s inseparable from those from the get-go.”
Companies like Stawnichy’s are more than just businesses – they are deeply embedded within their communities and cherished by those they serve. For Ukrainian-Canadians, ‘traditional’ fare like sausage, perogies, cabbage rolls and other staple items not only fill bellies but also cause hearts to swell with pride. When the invasion of Ukraine took place, those hearts – whether in Ukraine or in Canada – began burning with passion.
“With everything that’s happened in our world in the past two years, another catastrophe is not what anyone needs,” said Zeleny. “We just want to help be a part of the solution.”
The Summer 2022 edition of the Canadian Hog Journal is here!
Last month, I attended Alberta Pork Congress in Red Deer. It was a blast seeing so many people from across the western Canadian industry back in-person. As we head into the remainder of the year, I am itching to get out to other parts of Alberta and Canada to learn more about where our sector is headed.
Much has been published so far in this magazine about rising feed costs, but what about fertilizer? Your fields can benefit from manure applied with some simple strategies in mind and the right support. Alberta Pork’s Bijon Brown spoke with an agronomist to learn more.
Small-scale producers are an under-served demographic in the hog industry. While these farms represent only a fraction of all hogs on-farm, these producers matter. Find out how they are being increasingly engaged to promote awareness and understanding of key issues that affect the industry.
Antimicrobial use is a hot topic. Both within and outside of agriculture, experts worldwide are becoming concerned that farmers are causing antimicrobial resistance, which has implications for animal and human health. For the past half-decade, Alberta Pork and Precision Veterinary Services have been benchmarking usage in the province, and the results are in!
A novel study by Prairie Swine Centre is providing insight into the welfare of weaners in transport. Like antimicrobial use, animal handling subjects are being met with closer public scrutiny, over time. Veterinarian Lexie Reed provides her report.
The Canadian Meat Council (CMC) is celebrating its centennial! Representing the red meat processing sector, CMC advocates for improved domestic and global access to Canadian product. Just as packers need producers, the entire value chain needs consumers, and buyer confidence is a big part of that.
Growing up in Edmonton, ‘Mundare Sausage’ was practically a household name. With Ukrainian-Canadian roots, the Stawnichy family has been producing deli products in Alberta for six decades. As Russia’s war in Ukraine continues unabated, I wanted to celebrate this respected business, which, to me, embodies the resilient Ukrainian spirit within a Canadian context, and it further demonstrates how the hog industry has a much bigger impact than you might expect.
My older daughter (and first child) just turned four-years-old. She was born mere days after I started working with Alberta Pork, in 2018, so her birthday will forever be a reminder of that work anniversary for me. The photo on this page was taken during her party in our backyard, in suburban Edmonton. Like her dad, she’s a big fan of tacos. Pulled pork ‘carnitas’ were served for the crowd, of course!
Want to see your words on our pages? Give me a shout at andrew.heck@albertapork.com or find the Canadian Hog Journal on Facebook and Twitter (@HogJournal) to like, share and comment on our digital content. The more you engage with our posts, the farther our messages go! The ongoing support of our readers and advertisers means everything, and visibility is the key to that success.
This week we spoke at the National Pork Industry Conference (NPIC) being held in Wisconsin. The talk was on a World Market update.
World Markets
• Our Premise – The three major hog producing areas in the world USA, China, Europe are all cutting production at the same time. This has never happened before.
Feed Prices
• Feed Prices have pushed cost of production to record levels all over the world. Some relief in sight.
Contract Highs
Now
Corn
December
$7.66
$6.07
Wheat
July
$12.84
$8.31
Soybeans
September
$16.06
$14.16
• Spain 370 Euros/ton or over $10.40 a bushel, was $11.60 a bushel
• China 3128 RMB = $12.50 a bushel, was $13.70 a bushel
Europe
December 1
2020
2021
# down
Percentage
Breeding Pigs
11,415
11,004
– 411
– 3%
Total Pigs
145,877
141,516
– 4,321
– 3%
Europe Pork decline 5% Q1 – was 7% lower in March
Germany
• 1.48 million sows May 2022
• Germany has declined 6.2% since December 1 (-100,000) down to 1.48 million. Down over 200,000 in the last 18 months.
• High feed prices
• Loss of exports due to ASF
• New animal welfare regulations
• 12% less pork in Q1 vs. a year ago
Spain
• Largest producer in Europe
• Business model – contracting unlike rest of Europe it has been the only country in Europe to expand in the past two years
• Last ten weeks slaughter has declined year over year
• Has the highest price on record – just over cost of production
Netherlands
• Livestock industry under huge pressure for nitrogen pollution
• $27 billion USD budgeted to radically reduce livestock production through farmer buyouts – voluntary to start with
Sow herd (1,000 head)
2014
2019
2021
1,106
1,047
910
• Huge protests underway – some estimates sow herd will be cut by 30% -300,000 sows. Less hogs coming
China
• Sow liquidation began last July – 10 months later is March-April.
China Average Hog Prices
Price per lb.
35 lb. Feeder Pigs
Low was March 18
85¢ lb.
$59.60
Week of July 7
$1.38 lb.
$103.29
• The only reason the price increased is because of less pigs. China just had its 1998.
June 1 USDA Hogs and Pigs Report
(1,000 head)
2020
2021
2022
Kept for Breeding
6,236
6,220
6,168
Market
71,038
66,933
66,356
Pigs per Litter Dec.-May
11.00
10.95
10.97
Sows Farrowing Actual Dec-May
6,329
5,964
5,904
June-November
6,425
6,098
6,025
Why less Hogs?
• Financial losses during Covid crisis
• High feed costs
• Difficulty to get labor
• High building costs – $4,000 sow farrow to wean
• Breakeven?
• Generational change
USA – Demand
• Chicken production lower year over year with prices now $1.60 lb. a year ago $1.05 lb.
• Beef cow liquidation and lack of Heifer retention at record combined levels. USDA projecting almost 2 billion lbs. less Beef in 2023 then 2022 (-7%). Equal to about 4 weeks of hog production.
• Inflation – we don’t think it will cut U.S. Pork demand – consumers will cut out other items. Beef $2.60 cut-outs – Pork $1.08 cut-outs.
Fake Meat
Beyond Meat stock (Nasdaq: BYND)
• 234.90 High in 2019
• 27.17 Last week
Market capitalization – down $15 billion from peak
Down -$1.74 billion since January 1, 2022
Taste does matter
Gene-Edited Foods
• Survey by Iowa State of 2,000 U.S. residents
• Quote “Around 60% of the women in the survey said they would be unwilling to eat and purposely avoid gene-edited food.
Our Concern – Gene Edited Foods
• We support technology but we need to have customers for our Pork.
• I.E Paylean legal product – one customer China says no. Now no Paylean. What happens when one customer says no to Gene-Edited?
Pork Exports
• Challenge of Euro to U.S. dollar
• A year ago, 1.18 Euros to $1 USD – Now 1.03 Euros to $1
• This makes U.S. pork less competitive in World Markets at an almost 15% change
• Year to date exports down -24%
• Thank god for Mexico as its up 11% and the leading export country
• China starts up most U.S. plants approved unlike Spain and Canada
Summary
• Our premise is China, Europe and the USA the major hog producing areas with 75% of the world’s production all down at same time, probably first time in history.
• U.S. hog prices in our opinion be at minimum the same as this past 12 months with significant upside as global pork supply craters.
Jim Long President & CEO of Genesus gives a presentation on World MarketsSpencer Long of Genesus gives a presentation on the Genesus Jersey Red DurocGenesus hosted reception at the 2022 NPIC2022 NPIC opening night dinner2022 NPIC
The USDA released its June 1 Hogs and Pigs Report last week. Our observations:
June 1
(1,000 head)
2020
2021
2022
Kept for Breeding
6,236
6,220
6,168
Market
71,038
66,933
66,356
Pigs per Litter Dec.-May
11.00
10.95
10.97
Sows Farrowing Actual Dec-May
6,329
5,964
5,904
June-November
6,425
6,098
6,025
Pretty simple to see. Less sows, less market hogs, no improvement in litter size, less sows farrowing and to farrow. NO increase in production.
June 1 Market Hogs in inventory down 4.7 million head from 2020 or about 200,000 head less a week to market next 6 months. There will be no challenge to slaughter capacity anytime soon.
With 4.7 million less pigs in inventory no wonder there are so many nurseries and finishers empty or under capacity. This is driving demand for small pigs to meet shackle commitments and help ensure fertilizer needs from manure. Currently hog manure is valued at $15-20 per head as fertilizer. What once was considered a liability is now evolving into a real asset.
Our position is that lean hogs for the next 12 months will track at minimum to last 12 months with upside. Our premise. Less sows in place. There will be no more U.S. hogs. U.S. Beef supply declining up to 2 billion lbs. next year. Pork exports will have a greater pull. Next 12 months both Europe and China will have significantly less pork production. Europe will have less to export. China will import. All factors that at a minimum will keep U.S. hog prices tracking to last 12 months. But! We expect the greater pull of pork will push prices higher than we have had in the last 12 months.
Germany
Preliminary results from Germany’s Federal Statistics office indicates the sow liquidation in Germany continues on unabated. As of May 3, Germany had decreased from November 3, 2021 (6 months) 6.2% in its sow herd. The sow herd had decreased 9.8% since May 3, a year ago. In the last 18 months Germany’s sow herd had declined from 1.695 million to 1.480 million, a decline of over 200,000. A big number and reflection of the economic pressures of producing pigs under the cost of production triggered by ASF complications, high feed prices and new animal welfare regulations. At this point we believe Germany’s liquidation is still ongoing as pig prices continue under the cost of production.
Germany was once the largest producer in Europe. Now that is Spain. In 2015 Germany had 1.923 million sows. Now 1.480 million and still declining. Germany was once a big exporter has little pork to export in future when you consider their production compared to domestic consumption.
Feed
Stating the obvious grain is in free fall, corn dropped over 60¢ a bushel last week. Wheat declined in the $1.00 bushel range.
· Corn December contract high $7.66 bushel – last Friday close $6.07 = decline $1.59 bushel.
· Wheat July contract high $12.84 bushel – last Friday close $8.31 = decline $4.53 bushel.
· Soybeans September contract high – last Friday close $14.16 = decline $1.90 bushel.
Lower feed costs are needed to have sustainable hog profitability. Not there yet but trendline is leading to “surest cure to high prices is high prices.”
China
We have been writing since last fall that China was liquidating at massive level due to industry losses of over a $1 billion a week. We also wrote the only truth will be hog price as other data is quite suspect. Since mid-March China’s average hog price has gone up every week.
RMB/kg
U.S. Dollar lb./liveweight
March 18
11.98
85¢
June 24
17.96
$1.21
July 7
20.52
$1.38
A huge jump in price last week of 17¢ lb. on a 270 lb. hog is $46 per head. Since mid-March an increase of $143 per head (270 lb. hog). The industry has gone from losses of about $100 per head to profits of about $50. The hogs going to market now are from September breeding’s. China’s sow herd has gotten smaller every month since then. China hog price will continue to increase. In the not-too-distant future China will be stepping into world markets for importing pork.
Summary
U.S. has less hogs year over year. Europe has fewer hogs. China has fewer hogs. We are in unprecedented territory as the three major hog producing areas in the world are cutting production all at the same time for the first time in history. Prices have significant upside to where they are today in all areas in the coming months.
Woodlands Farm Tour
Recently Jordan Craig Service and Sales Representative for Genesus in Manitoba did a walk-through Woodlands video farm tour. Woodlands has been a Genesus commercial customer for 20+ years and uses Genesus Jersey Red Duroc sire bred to Genesus F1 dam. Woodlands was the first herd in North America to get 30+ PMSY. The video takes you through all of the Woodlands unit and shows pigs from start to finish. The presentation also highlights the data and results in Woodlands has as a Genesus customer.
Jim Long President-CEO Genesus Inc. Random Observations
Last week the U.S. Federal government filed a brief to the U.S. Supreme Court against California’s Proposition 12 a law to ban Pork from pigs that don’t meet California’s production standards. This is good news for Pork producers in our opinion. The Solicitor General of the U.S. now stands with Pork producers against California legislation. Our bet is now Prop 12 has better chance to lose in a conservative Supreme Court.
Harvest has begun in Southern Ukraine, currently wheat-barley $80 a tonne = approximately $2.60 a bushel. We expect there will be great effort to move grain to higher price markets.
U.S. Beef Cow and Heifer Slaughter
January-May
2021
2022
Heifers
4,059.64
4,171.7
Cows
1,394.91
1,611.2
Total
5,454.55
5,782.9
Year to date 328,000 more Cows and Heifers to slaughter compared to a year ago. The U.S. is projecting 1.9 billion lbs. less Beef to be produced in 2023 then 2022. Certainly, would be supportive to Beef and Pork prices.
There certainly seems to be price pressure on grains and oilseeds.
Contract High
Last Friday close
Decrease
Corn bushel – December
$7.66
$6.74
-92¢
Soybean meal – October
$440
$389
-$51
Wheat bushel – September
$12.85
$9.36
-$3.49
Canola bushel – November
$11.21
$8.70
-$2.51
No doubt there has been a decrease from contract highs. Lower feed prices certainly would help hog profits. We believe in most areas of the world hog production is decreasing. This will certainly cut need for ingredients in feed.
U.S. Sow Slaughter
Year to date January-May
2021
2022
1,333.61
1,261.7
A decrease year to date 72,000.
Sow herd according to USDA on March 1 was 6.098 million, a year before 6.215 million. A difference of 117,000. With a lower sow inventory, you would expect less sows being slaughtered. Let’s assume 50% animal replacement = 117,000 x 50% = 60,000 or expect 5,000 less sows slaughtered per month. January-May 5 months x 5,000 = 25,000. Our thoughts are the U.S. breeding herd is not moving significantly either up or down when we look at current sow slaughter, relative to breeding herd size and record sow mortality. Dead sows don’t get to sow slaughter.
Last week Spain the largest swine producing country in Europe reached record hog prices for this century. 1.63 Euros/kg up from a low of 1.02 Euros/kg in January (77.97¢ lb. – 52.70¢ lb. liveweight). One of the reasons prices are stronger is lower hog numbers. Prior to Easter weekly hog numbers exceeded year before. Since Easter most weeks have been lower year over year. Financial losses always end up cutting hog production. Ongoing sow liquidation throughout Europe driven by losses from record feed prices continue to cut hog numbers and push ho prices ever higher.
We have been writing for months that China was having a massive sow liquidation due to unprecedented financial losses. We also have written the truth will be in the price of pigs.
The Market Low was Week of March 18th
National Hogs Average
Feeder 15 kg
RMB/kg
U.S./lb.
RMB
U.S.
March 18th
11.98
85¢
377
$59.60
June 24th
17.96
$1.21
675
$101.1
Certainly, price of hogs and feeders have increased. Market hogs up 36¢ lb. (270 lbs. x 36¢ = $97 per head). Feeder pigs up $41 per head. No one pays more than they have to. Price is up because of fewer hogs.
We expect China’s hog price will continue to increase as fewer and fewer hogs come to market due to sow herd liquidation. In the not-too-distant future we expect the higher China hog price will lead to increase pork imports supporting EU and U.S. hog prices further.
Summary
Less hogs in North America, Europe and China will continue to push hog prices. It’s unprecedented that the three major hog producing areas of the world (75% of world’s production) all have decreased output at the same time.
We have to admit we are confused by the hog market. Cash hogs Iowa-Minnesota last Friday averaged $121.17 per lb. A reflection of what packers will pay for hogs not on contract. For lack of a better way to sum it, the National Average Lean Hog, made up of mostly contract hogs, was $1.08 lb. A big difference.
Other Observations
U.S. Pork Cut-outs closed Friday at $114.61 lb., a big jump. In the past week, almost 10¢ lb. We were with a packer last week that called the market “inverted.” They were paying in the $1.20 lb. range for Cash Hogs and Pork Cut-outs that day were $1.08. Don’t need a calculator to know that they were losing money on each cash hog they bought. This story for us is packers are still ready to pay up to get hogs in order to keep employees busy and meet sales order requirements. Hogs are short.
In the past few years having a packer contract based on percentage of the Pork Cut-out was considered excellent if it was in the 90%+ range. The last while, this formula has lagged, i.e., Pork Cut-outs mid-last week $1.08 lb. x 92% = 99¢ lb. Cash Hogs were $1.20 lb. $40 per head difference. Now Cut-outs Friday at $114.61 lb. x 92% = $1.05 lb., still below most of other market formulas. Our observation; Cut-out contracts recently have helped packers keep average cost of daily kills lower.
July Lean Hog Futures have ranged in the last three months from a high of 126.150 to a low of 97.375. A range of over $60 per head. They closed Friday at $1.11 lb. in the middle of the range. We find it hard to fathom any fundamental reason there should be such volatile gyrations. We think increasingly that Lean Hog Futures driven by hedge funds and algorithms is disconnected from the commercial hog market. When Lean Hog Futures were diving in May, the hog price held steady. We are wondering if the lean hog futures connection to the real hog market has about the same connection as show pigs to the commercial production industry. Answer of latter – not much, if any.
Most of the world’s hog production doesn’t have access to Lean Hog Futures. We aren’t sure if we are better off with the way it seems to be driven today by players with no plan or intention to produce or own pigs. As my late friend Doug Maus called Chicago, “Las Vegas with no rules.” On the flip side, lots of people like in Las Vegas, think they can beat the house.
Before and after the World Pork Expo my son Spencer and I did some traveling. In the course of our trip, we went through Michigan, Indiana, Iowa, Missouri, Kansas, Nebraska, South Dakota, Minnesota, and Wisconsin. We saw lots of corn-soybean fields. Observation: crop is in, looks good, moisture almost everywhere with heat. Current crop with moisture-heat is in good shape so far. Our industry is getting crushed with high feed costs. A big crop could certainly be helpful.
Prices last Friday
Beef Cut-outs Choice $2.66 lb.
Pork Cut-outs $1.14 lb.
Beef Cut-outs 2.3x higher than pork cut-outs. Why? Consumers will pay more for beef, obviously. It has demand. Consumers (our customers) prefer the taste of the red meat from beef, obviously. If we could move to half at $1.33 lb. it would add $40 to a carcass.
Our position has been for many years that the push to produce “The Other White Meat” was a terrible marketing plan. Beef always sold for more money and it’s red. We mistakenly as an industry chased the cheaper chicken (white meat). We then made pork too lean destroying the taste experience and once where loins and hams (half the carcass) led cut-out values they now languish, a true sign of consumers’ sentiments on these products. Also, in the quest to produce ever leaner hogs we all can see the increase and record sow mortality and wean to finish mortality as ever leaner low appetite pigs lose their robustness.
Cut-out – Friday
Carcass Cut-out value
114.61
Primal Rib
192.92
Primal Belly
173.11
Primal Butt
145.63
Primal Loin
102.86
Primal Ham
98.76
Ribs, Belly, and Butt all have marbling and taste. Consumers are voting with their money what they want. Loins and Hams are obviously not meeting consumer wants and languish in price (50% of carcass). If we could produce loins and hams that could get the price of Butts, an increase of 40¢ lb. x 100 lbs. of a carcass = $40 per head increase in carcass value. Real Money. To us, it makes sense to start with consumer demand, and its obvious they will pay more for a better eating experience (ribs, bellies, butts). To us, as an industry, we should be producing what the consumer is looking for. It’s what all good marketing companies do. Produce to demand.
Summary
The U.S. Hog Price and Pork Cut-outs showing further strength. U.S. hogs are trading over $1.20 lb. We expect the sow liquidation in Europe and China will lead to the three major pork-producing blocks in the world having less production in the coming months. This will lead to higher hog prices than future markets indicate.
U.S. Hog Prices Stay Strong
Last week the U.S. National Carcass price averaged $122 lb. U.S. Pork Cut-outs closed Friday at $127.34 lb. reflecting good demand relative to supply. Other observations:
Summary
U.S. hog prices stay strong with no sign of more pigs well into 2023. Europe prices at or near record levels with fewer hogs forecasted in the coming months. China prices have gained significantly (up $200 per head) since first of April. Less hogs in the U.S., Europe and China. Collectively 75% of world’s hog production. We expect World hog prices to be excellent in the coming months due to less supply.