Friday, September 19, 2025

If Misery Loves Company be a Pig Producer

Andrew Heck
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0
If Misery Loves Company be a Pig Producer
Pork Commentary,  November 25th  2019
Jim Long, President-CEO, Genesus Inc. 

The last two weeks it’s like we have reached a tipping point in production misery. The words “Survival Mode” we have heard more than once.  
Some things we have heard from different producers: 

“When is this going to get better?” 

“I am tired of hearing about China.” 

“I expanded, now I wish I hadn’t.”

 “I am in survival mode and hunkering down.”

 “It’s obscene how much packers are making, while producers lose their ass.”

“Not only are hog prices bad, but I am fighting to harvest my crop and now with rail strike we can’t get propane to dry what we do get off. It really sucks!” 

“Talked to our bank about new money. They are not interested in financing hog production.” 

“Our Congress is incapacitated by impeachment, when are they going to realize agriculture is in crisis and it needs help as one of the greatest strengths of our country?”

 “A group of us producers has gotten together and won’t sign the Packer contract being offered us until offer gets better.”

 Not exactly quotes from a group of happy campers. We are afraid it’s a reflection of many producers. Losing money is a grim reality.

“Hope is Mankind’s greatest weakness and greatest strength”.

Below is our reason for Hope: 

U.S. Pork cut-outs at 84₵ lb. in the face of record hog slaughter is amazing sign of pork demand. Packers making gross margin north of $50 per head (some claim its $80), means they have the resources to invest for future higher hog prices. At $50 times 2.7 million head (U.S. slaughter). $135 million gross margin a week, if it’s not more than $50 a head. You do the arithmetic. Certainly profits giving Packers huge incentive to kill all they can. 

Feed prices are reasonable and should stay there. 

To have hog price increases we expect hog slaughter numbers need to come down. Last week the average weights Monday to Thursday were lower than the same time the prior week. If hog weights drop it’s an indicator we are starting to lower potential slaughter numbers. 

North America- U.S.A./Canada/Mexico is essentially one market. Canada starting again to ship to China is a positive. Canada was 15% of Chinas imports- January to June. Then exports were stopped. That pork went into other markets. Now that Pork is going to China again, any pork that goes to China is off all other markets. China needs meat to fill the black hole caused by ASF. 

China didn’t start buying U.S. poultry a few days ago because they started loving America. They had banned U.S. poultry for the last five years. Any poultry that goes to China is not in any other market. China needs meat to fill the black hole caused by ASF. 

Tyson and JBS didn’t stop allowing Paylean (Ractopamine) to their plants as of January 1 for any other reason than to qualify pork for China. Combined they slaughter 180,000 head a day. Sure the hell this means more pork to China, or at least they expect to do it.

We have been told there is a scramble on for freezer space to get pork frozen for China, and that more inspectors have been hired by the U.S.D.A. to inspect pork to China. A real indicator of more exports happening.

The latest U.S. Pork Exports data from two weeks ago totaled 59,800 metric tonnes. The second highest week on record. Our farmer arithmetic says to an equivalency of 10 hogs per tonne. So our arithmetic equals 600,000 hogs (about 35% of U.S. weekly production). No wonder pork cut-outs are 84₵ lb., pork is moving at record volume. Everything that leaves supports prices. There is no other source of large amounts of meat protein left in the world that China can get except U.S.A. Chicken, Pork or Beef.

Indications are that ASF is far from under control in China. They will have less pork domestically in coming months, increasing further their meat protein needs. It appears that Europe might be near or at maximum amount of pork they have available for exports. The price in Europe due to the huge amount of pork being exported is between 95₵-$1.00 U.S. lean a lb. The wildcard is ASF is now in Poland- 60 miles from the German border. If it gets to Germany, does China accept pork from Germany? Currently Germany is China’s largest source of imports, with Spain second. China will do what they think is best for China. 

“Don’t Lose Hope – You never know what tomorrow can bring”.

We are optimistic that once we get slaughter numbers down, which they will do seasonally, the cash hog price will chase the pork cut-outs. The profits from Exports, which we expect to continue at record levels will push the industry into profits. We expect once that happens this will continue for a significant length of time. 

“Hope is seeing the light in spite of being surrounded”

 Get acquainted with the Global Mega Produce
A program of recognition led by National Hog Farmer sponsored by Genesus Inc. 

Betagro Group 
Betagro is recognized as a Global Mega Producer for 2019. 

Betagro Group was founded in 1967 under the name of Betagro Company Limited to produce and distribute animal feed. The company started its business with its first feed mill in Pra Pradaeng, Samut Prakan Province.

 The Group has grown substantially ever since first, by establishing a livestock production facility in Pak Chong, Nakhon Ratchasima Province, and then expanding further into the integrated agricultural sector with a complete production base in Lop Buri Province, which includes everything from manufacture and livestock farming to animal breeding, from producing pigs, broilers, layer chickens and breeders to manufacturing and distributing animal health products. 

Betagro works in collaborations with local farmers in price guarantee and contract farming schemes. These are fully compliant with internationally recognized quality standards required for effective selection, animal husbandry and advanced farm management under the prudent supervision of veterinarians and animal scientists. With a nationwide network of feed production facilities, the Group’s comprehensive animal feed business meets the different needs of farmers and its subsidiaries. 

The pork production segment consists of 120,000 sows, Thailand’s 2nd largest swine producer with plans to expand. The company focuses on producing premium quality food products for export and domestic consumption. In 2017 the Thailand-based agribusiness announced it will phase out crates both in gestation and lactation within 10 years. In the press release, Betagro said the main reason for its move is to enhance ‘quality of life’, calling the development ‘an unprecedented commitment in Asia Pacific’. The company hopes that in 10 years, the measure will apply to 250,000 sows.

In addition to its fully integrated agro-industrial and food business, Betagro has expanded actively into other related industries to Complement its core business:
  • Wholesale Food Business
  • Retail Food Business
  • Betagro Science Center
  • Property Development
Pictured left to right:-
Paul Anderson: General Manager S.E.  Asia, Geneus Inc.
Khomsun Pintapakung: Assistant Vice President – Livestock Production, Betagro Group
Rawat Chantong: Geneticist, Betagro Group
Komson Tuangsithtanon: Division Manager – Genetics Improvement, Betagro Group

U.S. Pork Cut-outs Surge!

Andrew Heck
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U.S. Pork Cut-outs Surge!

Pork Commentary,  November 18th  2019
Jim Long, President-CEO, Genesus Inc.

Who would have thought on a week in November U.S. pork cut-outs would hit 90.12₵ lb. in the midst of record slaughter (last week 2,749,000). 

Pork isn’t 90₵ because buyers want to pay more. Considering the record hog numbers it must truly be a reflection of demand. U.S. Pork Cut-Outs are now are now 15₵ lb. higher than a couple weeks ago, which has increased gross packer margin $30 per head. 

If you use a 90₵ cut-out and 60₵ lb. for market hogs, the spread of 30₵ lb. must be approaching an all-time high for gross packer margin. 

Last Saturdays hog slaughter was 348,000 up from 244,000 the week before. A sign there are hogs to slaughter but also packer margins that justify overtime pay for Saturday’s plant employees. Being a producer we wish the hog price was higher, but we are glad U.S. pork cut-outs are in the 90₵ lb. range. That price gives room for rapid hog price increases. 

We expect that Export demand is excellent. China and other countries are upping their purchases. It really helps that Canada can now once again ship to China.  It is expected Canada could sell $1 billion of pork to China over the next twelve months. That Pork will thus be out of the North American domestic market. 

Last week China announced that after a five year ban on importation of U.S. chicken the trade could begin again. U.S. government officials estimate the market could be worth $1 billion over the next year. The move is a reflection of China’s need for meat protein to fill the Black Hole created by African Swine Fever.  All chicken that goes to China leaves the U.S. and will mean less protein for U.S. consumers which will support chicken and ultimately pork prices. 

To sell to China no Ractopamine (paylean) can be fed. The importance of JBS and Tyson to ban Paylean by the first of January (180,000 head combined a day) can-not be overstated. This will create a huge source of more pork for China.  Both companies pulled Paylean out for no other reason than the recognition of potential sales to China.  

Watch U.S. pork sales ramp up further to China in early 2020.

Currently Hogs in Europe are bringing about 75₵ U.S. lb. liveweight. In the U.S. the price is 45₵ lb. liveweight. A 30₵ lb. spread. The big difference is the huge amount of pork they have been sending to China, which subsequently get it out of their domestic market.  

Recently we read an article where the Euro price of pork was financially damaging their processors. There has been discussion about government financial support to processors? A lot different scenario than what is going on in North America. 

This past week we had meetings with customers and prospects in Canada and the U.S. Collectively, 160 people. Our take home message from them is “When is this going to get better? We have had enough!”  There is real anger from independent producers that they believe Packers are not sharing the pork pie. This will happen when one side is losing money i.e. producers.

For what it is worth we expect the current gross packer margin will be short term. As slaughter numbers decline seasonally, gross packer margin will decline. If cut-outs stay high or go higher, hog prices will chase them fast.

Summer futures are around 90₵ lb. Pork cut-outs are already 90₵ lb.  It’s not insane to think Pork cut-outs can blow past $1.00 as hog supply seasonally drops, Tyson & JBS ramp up China Pork shipments, on top of Canada’s pork to China and now chicken leaving the U.S. to China. Historically high hog prices lead to low packer margins.

Maybe we are optimistic, but China hasn’t added U.S. chicken and Canada Pork to list of protein sources the last 10 days for no other reason than to fill their protein Black Hole. A hole that will need to be filled for a minimum of two years. 

Get acquainted with the 
Global Mega Produce

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

COFCO

COFCO is recognized as a Global Mega Producer for 2019.

Based in China, COFCO has global distribution in agriculture, grain, oil and foodstuffs, and it does business in more than 140 countries and regions around the word. Total assets were RMB 544.4 billion yuan while annual operating revenue was 470.9 billion yuan in 2018. 

COFCO Meat Holding Co., Ltd got listed at HKEX in 2016, with its business involved in feed manufacturing, pig production, slaughter, meat processing and sales of fresh pork and import and sales of frozen meat products. 

The company has two core brands for fresh pork – Joycome and meat products Maverick. In 2018, the company produced 2.55 million hogs, with production mainly based in the provinces of Jiangsu, Hubei, Jilin and Hebei.

In 2019, African Swine Fever hit China hard and greatly affected all producers in China. Well established companies such as COFCO are making great efforts to rebuild the Swine Industry in China.

COFCO
 Li Xingyuan, (GM of Operation Analysis of Swine Division) and  Xu Jianong (GM) of COFCO Meat Holding Co., Ltd. with  Mike Van Schepdael (Vice President )and Yaping Gu (General Manager China) of Genesus Inc. 

Let’s all recognize COFCO as an industry leader and 2019 Global Mega Producer.

THE BIG STORY – China Agrees to resume buying Canadian Pork –

Andrew Heck
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0
THE BIG STORY – China Agrees to resume buying Canadian Pork –

Pork Commentary,  November 11th  2019
Jim Long, President-CEO, Genesus Inc.

Last June China stopped purchasing Canadian Pork. Up to that time in 2019 China’s pork imports from Canada were 15% of total imports, Just below Spain and Germany at about 18-20% each. 

The closure put pressure on Canada-U.S. pork prices.  The issue that triggered the stoppage was false labeling by a Canadian pork exporter to China that was missed by the Canadian Food Inspection Agency. There was also some political issues involved mainly due to the Huawei Executive being held by Canada for possible extradition to the U.S.

Last week much to the relief of Canadian and should be to U.S. pork producers China agreed to begin again to import Canada Pork.

Our observations:

  • Pork leaving Canada to China takes that pork out of Canada, U.S. and Mexico markets.
  • Less supply in Domestic North American market will support prices in all three countries.
  • Canada’s tariff on Pork to China is 12%. Currently U.S. is 70%
  • There are reports that over the next twelve months China’s pork production will be reduced by 24 million tons. U.S.A. – Canada – Mexico’s production in total isn’t much more than 15 million tons a year.
  • The amount of pork Canada can send to China is much more limited by logistics than demand.
  • China is a black hole for pork. It will go and disappear.
  • The arithmetic to send pork to China is aided by the raw economics.

We have done business in China for 8 years. Chinese are natural capitalists and traders. The arithmetic of buying pork in North America is simple- Pork cut outs 80₵ lb. last week. China Pork Cuts outs about $3.10 lb.

Example: buy Pork in Canada at 80₵ lb., pay 12% tariff. Sell Pork at $3.10 lb. That’s a spread of over $2.00 a lb. to cover costs.

A 200 lb. carcass = $400. It doesn’t take an Ag Economist to figure out the incentive.

Every 40,000 lb. (200 Head) shipment would be $80,000 gross margin. As they say “Where do I sign up to do this?”  

What we calculated is probably over simplified but make it half of what we calculate, it sure the heck beats raising hogs the last couple years.

One of our points of this exercise is that beyond needed pork to fill the black hole created by ASF there is tremendous financial incentive for pork to move to China. We are not sure how fast Canada can get back to full speed shipping to China, but obviously big incentive to get it going.

Other observations:

  • Market Hogs are $700-$750 U.S. each in China. It is really expensive for some potential producers who have empty facilities or were backyard producers to purchase gilts. 
  • Risk-Reward.
    • First, do they have money to place gilts and carry the cost to get to production?
    • Second, ASF has not been stopped. Invest and get ASF ?
    • Real issues for China to rebuild industry. 

Last week we highlighted Meta Farms data that indicates average herd had 12.2% sow mortality. The top 10% 18.1%. This past week we read a feature article on National Hog Farmer blog about Pedicures- feet trimming for sows. Wonder why there are more dead sows? It’s poor feet and legs genetically.


If you wish to lower sow mortality, maybe ask the Genetic supplier if their genetics need feet trimming- Its cause and effect. We will categorically state that Genesus doesn’t.

We have been told that one genetic company actually encourages their customers to go to foot trimming school. That’s a fun job. Foot trim and haul out dead sows. 

As Forrest Gump said “Stupid is what Stupid does!”

Meta Farms 

MetaFarms is the major Analytic platform for over 500 production companies in Canada-U.S.A.

Below is last quarter finishing results July 1- Sep 30- 2018 and 2019

Get acquainted with the 
Global Mega Producer

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

Miratorg 

Russia’s leading meat-producer and supplier

Miratorg is recognized as a Global Mega Producer for 2019.

Miratorg is Russia’s largest pig producer with a breeding base of 138,000 heads and a total of 400 thousand tons of pork marketed per year. Live pig production started in 2005 in the Belgorod Region of Russia and are currently in the process of doubling their pig production which is expected to be a 4 year project.

The company is fully integrated from field, live pig production including feed manufacture, slaughter and processing, including production of ready made meals and finally a chain of own brand supermarkets. Miratorg is one of the Russia’s largest employers in the agricultural sector of the economy, with more than 26,000 staff.As well as pork production, Miratorg are also the largest beef producers in Russia with a production output of over 80 thousand tons. They produce also Chicken and frozen vegetables all in fully integrated models.

Sergey Kulikovski – Executive Director, Miratorg and Simon Grey, General Manager Russia, CIS and Europe, Genesus Inc.
 

No Joy in Hog Town

Andrew Heck
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0
No Joy in Hog Town

Our sense is that the U.S.-Canada swine production sector is getting worn out by the markets and lack of profitability over the last couple years. The hog market has eaten producer equity. 

Producers see lean hog futures reflecting profitability, but there is a sense of mistrust if it will become reality.  All know about China but the attitude is “Show me the money.” 

We always hear about hedging and risk management using future options but we have never seen any data that indicate producer participation. Maybe it’s because most producers think of the lean hog futures as a Las Vegas Casino where the house always wins in the end. 

Whatever the reason, our sense, lots of producers are questioning their long term future.

Other observations:

  •  If Paylean makes hogs grow faster, the banning of Paylean (Ractopamine) by JBS and Tyson could mean 180,000 hogs per day grow slower. Will this cut carcass weights?
  • Feeder Pig break evens $70 for a 45 lb. pig. U.S. Cash Market $44. Spread as wide as we have ever seen. Never better time to buy pigs to put on feed.
  • The U.S. Sow price has had a big jump over the last month. See Below: (cents per pound)
Sow priceOct 3Nov 1
550 lbs. and up31.546.48
500-550 lbs.30.545.18
450-499 lbs.28.041.97
400-449 lbs.26.537.54
290-399 lbs.26.037.62

Big Sows have jumped (550 lbs.) $82 a head in a month. Shows how fast a market can change. Markets usually move when we least expect. No one, we expect, thought sows could jump $82 a head in a month. 

We believe at some point small pigs and market hogs, will have an unexpected jump.

The Real Marketing Edible Artificials Truthfully Act

(This from the National Hog Farmer)

A Legislative Act that addresses deceptive labeling, “The Real Marketing Edible Artificials Truthfully Act” would address deceptive labeling practices in alternate protein and require plant-based meat alternatives to be labeled as “imitation” meat. 

The legislation introduced by Congressman Roger Marshal (R-KS) and Anthony Brindisi (D-NY) will codify the definition of beef for labeling purposes, reinforce existing misbranding provisions to eliminate consumer confusion, and enhance enforcement measures available to the U.S.D.A. if the Food and Drug Administration fails to take appropriate action.

The National Cattlemen’s Association is supporting the bill.  As Pork producers we should too. It will only be a matter of time before “imitation” pork-meat will be marketed. 

Let the “initiators” call it what it is. Don’t “piggy back” on our product names.

Chlamydia

Seems that the chlamydia- lack of estreus issue that has been a factor over the last while in some gilts is being recognised. We understand major credits are being offered as compensation for the problem. 
If you had problem best to get in line to get yours. 

U.S. Exports 

U.S. Pork Exports last week were the highest since July 2015, except for the two weeks earlier.  China Exports reported last week (10, 220 metric tons), Second highest week on record. (Highest two weeks earlier).  No doubt there appears to be more pork being exported. 

The ASF issue is going to lead to more exports to China, Viet Nam, Philippines and South Korea.

Metafarm 

Metafarms is the leading Pork Production- Analytic System.  Below is the average of 270 farms, re: Sow production last quarter.

Sow production – July 1st to September 30th, 2019

Pigs Weaned/Mated female/Year26.7
Litters/Mated Female/Year2.36
Pigs Weaned & farrowing space154
Pigs Weaned lifetime female40.9
Average Total Born14.6
Pre-wean mortality11.9
Pigs/Weaned/Sow11.8
Average Wean Age20.4
Culling Rate42.3%
Sow Death & Destroy Rate12.2 %
Replacement Rate50.7%

Couple Numbers jump out at us; Sow Death & Destroy Rate of 12.2% and Pig weaned lifetime at 40.9. 

Seems to us there must be lots of female breeding stock that are far from robust.

Get acquainted with the 
Global Mega Producer

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

Vall Companys Group

Vall Companys is recognized as a Global Mega Producer for 2019.

The Vall Companys Group story began in 1956 as an agri-food family-owned operation. The company’s operational model is based on the integration of all stages of the production process. With 213,000 sows in production, Vall Companys is the largest European independent Mega Producer swine company.

What has made Vall Companys unique is the development of an integration model, in which farmers provide facilities and labour. The rest of the services -animals, feed, veterinary control- are provided by the integrating company. The model was first used in the pork sector, and subsequently introduced in the poultry area. They are in all production chain

Key figures:

  • Total sales: 1.8 billion dollars
  • Production meat (thousand MT) 
  • Pork: 340 
  • Poultry: 135 
  • Beef: 13 
  • Cured ham: 13
  • Processed: 7
  • Sows in production: 213,000 
  • Production of pigs: 5.3 million heads 
  • Production of poultry: 72 million heads 
  • Production of feed: 1.79 million MT
  • Flour: 470 thousand MT
  • Associated farms: 2,100

Activities: feed manufacturing, meat industry, animal production (swine, poultry and beef), flour milling, veterinary medicaments, merchandising and transportation.

Mercedes Vega, General Director for Spain, Italy & Portugal; Luis Pico, Sow Production Manager Vall Companys;  and Jim Long, President-CEO, Genesus Inc.
Mercedes Vega, General Director for Spain, Italy & Portugal with Jose Quirino Cabañes – Production Director and Alfredo Castell – Genaral Manager at Agrocesa, part of Vall Companys Group

Hog Market, Compared to a Year Ago

Andrew Heck
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0
Hog Market, Compared to a Year Ago
Pork Commentary,  October 28th, 2019
Jim Long, President-CEO, Genesus Inc.

 Sometimes it pays to look at where we are compared to a year ago.  
· National Daily Base Lean Hog Price – 53-54%
– October 24, 2019_64.50 ¢ per lb.
– Oct 26, 2018_63.72 ¢ per lb.

·  This past week’s hog slaughter – 2,693,000. 
– A year ago, same week 2,563,000 or plus 5%

·  Pork Cold Storage- September 30 up 2% from a year ago
-598,899 million pounds compared to 589,403 in 2018

·  Year to date Sow slaughter on September 30
– 2018 – 2,242 million
– 2019 – 2,235 million
– Almost no change

·  U.S.D.A cash average 40 lb. feeder pigs
– This past week $44.
– A year ago, same time $40. 

Our Observation: 
More hogs to market (plus 5%) this year compared to last, but hog prices the same, reflecting better pork demand. Pork in Cold Storage and sow slaughter showing almost no year over year difference, while 40 lb. feeder pigs are 10% higher year over year. 

Of note – last year feeder pigs went from the $40’s to $70’s by mid-December.  We expect a similar scenario this year.    

Below is U.S. Direct Feeder Pig Chart 
 Get acquainted with the 
Global Mega Produce
A program of recognition led by National Hog Farmer sponsored by Genesus Inc.
 
Muyuan Group 
Muyuan Group is recognized as a Global Mega Producer for 2019.
 
Muyuan Group was established in 1992, its main business is hog farming (accounting for over 99% of its total revenue) which has been developed in coordination with other businesses including feed processing, swine genetics, hog slaughtering. Currently the total asset of Muyuan Group is 55.3 billion yuan with more than 40,000 employees and more than 150 subcompanies. The hog farming business covers 93 counties in 14 provinces all across China.
 
The subsidiary company – Muyuan Foodstuff Co., Ltd was listed in the stock market in January 2014, its current market value is over 150 billion yuan. In 2018, the company marketed over 11million hogs.
 
Facing with the severe situation caused by ASF, Muyuan Group has been dealing with it in a positive way and continuously groping for good experience and practice for prevention and control of ASF, which has resulted in a fast recovery and even further expansion in the number of sows in their production system. It is estimated that by the end of 2019, their sow inventory will reach 900,000 head. 
 
Let’s congratulate on the great achievement and all recognize Muyuan Group as an industry leader and 2019 Global Mega Producer..
Photo from left to right: Yaping Gu-GM for Genesus China; Lyle Jones- sales direct for Genesus China; Li Yanpeng-production director for Muyuan Group; Tian Fangping-Technical consultant for Muyuan Group

U.S. Pork Exports Soar

Andrew Heck
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0
U.S. Pork Exports Soar

Pork Commentary,  October 21st, 2019
Jim Long, President-CEO, Genesus Inc

U.S. Pork Export Sales soared last week with 351,000 metric tons purchased. Of that number 152,600 tonnes were by China combined with the week before’s 142,200. 

China purchased 294,800 metric tonnes the last two weeks. Farmer arithmetic equates that to about equivalency of 3 million market hogs. 

To say things appear to be heating up is an understatement. 

The total collapse of China’s hog production base is leading to the need for massive pork imports. You only need to see the announcement by Tyson Foods and JBS, two major U.S. packers with a combined daily harvest of over 170,000 per day. They both announced in the last few days that they will not accept hogs in the future that have been fed ractopamine (paylean). China will not purchase pork fed by ractopamine. You don’t need to be an ag-economist to connect the dots on what’s happening. 

Neither company wants to miss out on China sales- they both want to increase profits. They see it’s here- record sales to China last two weeks. We expect we are about to see a surge in hog prices in the not too distant future. The promise of huge pork sales to China look like they are now a reality. 

To put the last weeks export sales in perspective- Total U.S. Export to Oct 10th, is 1.180 million metric tonnes. Of the 1.180 million, 210,900 metric tonnes were sold last week! We are at record breaking export numbers with not only China, but to Mexico, Japan, and South Korea pushing exports to record levels. 

When you look back over the last 10 days, market hogs have gone up over $20 per head. This was despite weekly hog marketing’s at record levels. Its obvious demand must have driven prices higher. 

We expect some buyers jumped in trying to get ahead of the reality of higher prices coming. 

Below is chart on U.S. Meat Export Federation- It says it all! 
Graph source: www.usmef.org

China Price Update

China National Average Market Hog Price36.4 rmb/kg = $2.33 U.S. liveweight a lb.
Highest Hog Price in Guandong41.5 rmb/kg = $2.65 U.S. liveweight lb.
Retail Pork Price40-44 rmb/kg = $2.60 – $2.85 U.S. lb.
Pork Belly PricePork Belly Price
60 rmb/kg = $3.84 U.S. lb.

LEMAN CHINA SWINE CONFERNCE

As the world’s largest and most influential swine industry event, the Allen D. Leman Swine Conference was founded in 1985 and has a 34 years history. The conference was introduced into China in 2012. Leman China is now considered one of the most valuable meetings in the swine industry through providing scientific solutions to the complex challenges facing the swine industry.   

The 8th Leman China Swine Conference & 2019 World Swine Industry Expo was held on October 19-21, 2019 in the Zhengzhou International Convention & Exhibition Center.

Swine experts from North America, China, and Europe presented the latest information and scientific solutions in swine production. Much focus was given upon ASF and best practices to deal with the epidemic. It is expected this year’s Leman China has drawn about 6,000 participants.

Genesus exhibited at this year’s conference and Expo and found much interest in Genesus products and services as the Genesus Brand name has become quite famous in China.

Representing Genesus were: Yolanda Hou, Executive Assistant in China; Lyle Jones, Director of Sales China; Yaping Gu General Manager China; Edwiin Hong, Business Development China
(Pictured left to right) 

USA-China have Agreed to a “Phase One” Trade Agreement

Andrew Heck
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0
USA-China have Agreed to a “Phase One” Trade Agreement

Last week we wrote about Hope being a pre-requisite to being a swine producer.  Hope got a boost last Friday when it was announced that USA-China have agreed to a “phase one” trade agreement. 


This phase is supposedly to include $50 billion in agriculture purchases by China. Supposedly 30 million metric tonnes of soybeans and an unspecified amount of pork. In return the U.S. will not increase a planned tariff increase scheduled for October 15.


It appears to be less than clear if China as part of the agreement is dropping or decreasing the tariffs of close to 70% on U.S. pork. 


Let’s assume they start taking offal’s and other cuts, the key is removing pork from the U.S. domestic market. 
With hogs at $2.11 U.S. lb in China, U.S. pork can be over $1.00 lb. and still pay a 70% tariff. Point is, flowing pork to China at any significant level can put 10₵ lb. on U.S. hogs in a very short time. This is good news for U.S. swine producers.


China could use some pork. Last week China’s hog price jumped to 33.56 rmb a kg. That’s $2.11 U.S. liveweight. A 260 lb. hog is bringing $560 U.S. Doesn’t take an ag-economist to figure out that the price is a true reflection of demand out-stepping a short supply. 


With ASF still eliminating pigs in China there is little relief in sight for Chinese consumers without large scale imports of pork and other meats.

Another reflection of supply-demand in China is early wean pig price. Last week it reached 72.22 rmb. Or just over $100 U.S. each. In February this year they were $25 U.S.

U.S.D.A. confirmed last week record large sales of pork to China including 18,810 tonnes for shipment this year and 123,362 tonnes for shipment in 2020. Our farmer arithmetic tells us the total is equal to about 1.5 million market hogs in carcass equivalent.


We expect that as the new trade commitment moves forward significant pork will be exported. All good news for U.S. pork producers and indirectly Canada’s as the higher U.S. hog price will push Canada’s higher.

Also, Oct 14 China Ministry of Agriculture announced that China’s sow inventory is down 38.9 percent in September from a year ago and pig herd down 41.1 percent. Although these numbers are different than ours and many others estimates, it indicates massive decline. The number also indicates continual decline with the sow herd down 1.5% and pig herd 2.4% from a month ago.

Take home message – China’s supply of pork is going to decline continually over the next months and with hog prices already $2.11 U.S. lb., where is the high?
 

Alberta 

Last week we attended the Alberta Livestock Expo, held in Lethbridge. It was very nice to visit with many customers. In this region Genesus has over 50 plus customers.

Like the rest of the USA-Canada, industry producers are not happy with the current hog price. Current prices don’t work if you want to make money. Hope comes with future prices that show profits in the coming months.  Many producers at the Lethbridge conference were booking advanced sales to lock in future profits.

One of the highlights at the annual Lethbridge Ag Expo is the Carcass competition. Hogs are judged at Maple Leaf Foods- Lethbridge Plant. The contest is a combination of back fat, loin depth, belly color and marbling. Genesus customer Rosedale was No. 1, Big Bend No.2. While Elm Springs and Fairlane came after third place, Genesus 4 of top 5 is further confirmation by third party judge that Genesus has the World’s Best Pork.

Get acquainted with the 
Global Mega ProduceA program of recognition led by National Hog Farmer sponsored by Genesus Inc. Zhengbang Group Zhengbang Group is recognized as a Global Mega Producer for 2019. Founded in 1996, Zhengbang Group is a national agricultural industrialization-leading enterprise with headquarters in Nanchang City, Jiangxi Province, China. The main scope of business includes animal husbandry, crop planting, agricultural materials marketing, distribution and financing. Zhengbang employs more than 35,800 people and has 315 branches across China. In 2018, the company produced over 5.5 million hogs. In 2019, ASF hit hard and had a big effect upon all producers in China. Despite ASF, Zhengbang has plans for continued expansion will be looked upon to play a significant role in rebuilding the Pork Industry in China. Let’s all recognize Zhengbang Group for their impressive accomplishments as a 2019 Global Mega Producer. 
Photo left to right: Hu Song, Agribusiness Consultant, Lyle L Jones, Director of Sales China Genesus, Wang Chuang, Zhengbang Dean of Research Institute, Mike Van Schepdael, Vice President, Genesus Inc. and Yaping Gu, General Manager China, Genesus Inc. 

Hope – A Pre-requisite to be a Hog Producer!

Andrew Heck
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Hope – A Pre-requisite to be a Hog Producer!

The U.S. hog market has shown some life in the last week with lean hogs gaining about 5₵ lb., getting close to 60₵.  But what is there to say. Current prices mean a $15- 20 U.S. per head loss.  It’s not a pretty hog market for producers.

It’s once again good to be a packer. One estimate we read had Packer Kill and Cut Gross Margin at $22.00 per head.  Currently with 6% more market hogs compared to last year, packers have lots of options.  No one pays more than they have too.

Last week the U.S. Hog marketing’s were 2,669,000 up 169,000 from a year ago. The huge numbers of hogs have led to the finishing capacity to be maxed out. We expect current market numbers are far greater than the current small pig placements. This in itself is beginning to create finishing space. 

The lean future market reflects the expectation of less hogs and greater demand, Friday with October 62.40; Feb 74.47; and April 81.50.

Last week in conversations with different industry veterans, they all commented on the negative attitude in our production base.  Many producers wonder what the future is. They have lost money. They see the trade war hitting swine producers and them being sacrificial lambs for the bigger picture.  This is in both the USA and Canada. 

This concurrently with the real hope that a trade agreement can be made to fill the cavernous hole ASF has created in China’s production base.

China

Rabobank- the world’s largest Ag lender reported last week that China’s pork production will fall by 10%-15% in 2020, on top of the 25% drop in 2019. Rabobank also expresses the opinion that China Pig herd has decreased by half in 2019 and is still falling.

We agree with Rabobank’s sentiment on where the China pork and hog supply is heading from our own observations in China.

What you really have to ask, what does a further 10-15% drop in pork production do to China’s hog prices?


Currently, China’s average price is 28.52 rmb/kg or $1.81 U.S. liveweight a lb. (a 260 lb hog-$470 U.S.). A further 10% drop is at least one million fewer market hogs a week on top of the current market hog supply. 
It’s mind boggling. How high can prices go? 


The pressure to import pork will be even greater as every week China’s hog and pork supply declines.

This week new trade discussions between the U.S. and China resume. Maybe some resolution that benefits U.S. hog producers? There is hope.  Hope is necessary pre-requisite to be a hog producer.

JBS USA

Last week JBS – The second largest packer group in U.S.A. (93,000 per day capacity), announced they will now stop accepting swine fed Ractopamine (paylean), a growth promoter. China will not accept Pork fed Ractopamine. In our opinion this is a clear signal JBS is getting themselves in a position to sell large quantities of pork to China.

Smithfield Foods – the largest U.S. packer (130,300 per day capacity) has already banned Ractopamine usage. 

Combined Smithfield and JBS at 213,000 per day are over 40% U.S. total packer capacity.

Last week, Dr. Steven McOrist wrote an article in Pig Progress on ASF.  In Southeast Asia he estimates a drop in production from ASF – 30% on commercial farms and 80% of backyard farms. 

If you add up the estimate he made for decrease in the expected supply in Southeast Asia- Viet Nam, Myanmar, Philippines, Thailand, Laos, and Cambodia, it comes to over 5 million metric tonnes.  If close to correct, there will be a large increase in local hog prices and there will be increased pork imports to all these Southeast Asian countries. A further pull and demand on the U.S. hog market.

Summary

  • It’s no fun losing money as a U.S. – Canada producer. 
  • As a pig producer, hope springs internal. This market could change on a dime. 

A major move for exports and the dog might not run out of chain for a long time.

Get acquainted with the 
Global Mega Produce

A program of recognition led by National Hog Farmer sponsored by Genesus Inc.

CP Foods 

CP Foods is recognized as a Global Mega Producer for 2019.

The Charoen Pokphand Group is a diversified transnational conglomerate that consists of three core businesses that operate in the agri-food industry, retail and distribution, and telecommunications, as well as involvement in 10 additional industries such as finance, real estate, pharmacy, etc. 

CP Foods conducts business in more than 100 countries and employs more than 350,000 employees around the world. CP Group’s revenue from the agri-food sector totaled $5,6 million, with 65.6% coming from China and 34.5% from Thailand and Vietnam.In 2018, CP China produced 2.8 million hogs. However, in 2019, China was hard hit by ASF which is forcing big changes within the pork industry.  CP Group have new plans for significant growth in China to help fill the void left by the shortfall in the countries production. Let’s all recognize CP Group on their role in the rebuilding of the pork supply in China and significant presence in the global food industry. 

Photo left to right:
Mr. Bai Yufei – Senior Vice Chairman Agro-Industry & Food Business China Area, CP Group;
Mike Van Schepdael – Vice President, Genesus Inc. 

Wild Ride – Market Gyration Continues

Andrew Heck
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Wild Ride – Market Gyration Continues

Pork Commentary, September 16th 2019 
Jim Long, President-CEO, Genesus Inc. 

Last Monday, December Lean Hog Futures were 59.72₵ lb. On Friday, 5 days later, they closed at 68.70₵ lb. That’s a 9₵ lb. increase or about $20 per head in 5 days. 


It’s a Wild Ride!

It seems our daily emotions go up and down with the lean hog futures. Since mid April, December lean hog futures have traded up and down in a 30₵ lb. range (89.8-58-77) 
It’s nuts. One day things look good-next day- What the heck?


China

It’s all about China! 

Daily, we watch the China market price? What are tariffs? 
How much pork is being exported to China?

This past week the market benefited from some positive talk on USA-China trade negotiations. Also, from the China announcing they would not add more tariffs on U.S. pork. 

Pork net sales to China last week of August were 10,880 metric tonnes, the highest since May. (our simple arithmetic: one tonne is 2200 lbs/200 lb carcasses = 11 hogs per tonne  meaning 10,880 metric tonnes ~ 120,000 hogs equivalency.)

U.S. Export Meat Federation

Year to date Accumulated Pork export
January 1 to September 5

CountryYTD 2017YTD 2018YTD 2019YOY
Total733,193758,128871,28815%
Australia24,23926,75234,49844%
Canada51,81656,11355,485-1%
China49,98420,999183,409773%
Columbia23,71334,56336,9237%
Hong Kong42,99234,56432,144-7%
Japan128,009126,277100,191-21%
Korea82,425117,727102,965-13%
Mexico270,080278,227247,225-11%

There have been 35 weeks since January 1 to September 5. 

China has averaged just over 5,000 tonnes of imports per week from USA since January 1. Going forward that’s a number to watch- a bump to 10,000 tonnes per week is doubling sales. 

What we need is to send 20,000 tonnes a week (240,000 hog equivalency). 

With what is going on in China with total lack of pork supply, it’s a reasonable number if tariffs could get lowered.

Last Week:

  • China Average price 27.62 rmb – $1.76 U.S. lb. liveweight or 270-pound hog = $475 U.S. head.
  • USA Average Price 53-54% lean 58.81 = 202 lb. carcass = 270 liveweight = $118 per head

That’s a difference of $357 per head between China-USA last week . With that price spread you’d think there will be lots of buyers wanting Pork in China.

Other China News:

The China Ministry of Agriculture and Rural Affairs monitors 400 counties for pig production. In July the number of pig inventory fell by 9.4% month on month from June. Number of sows decreased by 8.9% from June.

The sow number decrease would between 2.5 – 3 million sows. The pig inventory down 30 million head approximately. This is in one month! ASF is far from under control in China.

The two largest pig companies in China are Wens and Muyuan. They released their sales for August.

Wens: 

  • 1.173 million market hogs sold in August.
  • A decrease of 34% from July. A decrease of 42.68% from August last year

Muyuan: 

  • 711,000 market hogs sold in August.
  • An increase 4.6% from July, but down 36.86% from August a year ago

The numbers from the two largest swine companies in China reflect in our opinion, the reality of China’s ASF issue

GENESUS CUSTOMER  TESTIMONIAL

We made a promise, to deliver results…and we did! 

TQLS (China)

‘‘The main reason for TQLS to choose Genesus as our genetic supplier is because Genesus’s many years professional expertise and experience in swine breeding. 

Genesus can help our company to improve the production efficiency, also Genesus has been focusing on meat quality selection for over 20 years, which can help us to provide better quality pork to Chinese consumers. 

The breeding pigs from Genesus Nucleus herd helped us to increase the litter size by 2 piglets per litter, and reduce cost of gain, while the finishing time is reduced by 10 days.’’

– testimonial received from TQLS representatives.  

Jim Long’s Pork Commentary Sept 2019

Andrew Heck
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Jim Long’s Pork Commentary Sept 2019

Advertorial

Pork Commentary,  September 9th, 2019
Jim Long, President-CEO, Genesus Inc.

U.S. July Net Pork Exports Up 35.6%

Some positive news for the U.S. pork industry is the increase in the Pork Exports and decrease in Pork imports in July. Some Points:China / including Hong Kong at 112.67 million pounds was up significantly. A year ago July China/Hong Kong U.S. imports 23.48. Up 380%Mexico imported 150.75 million pounds in July. The highest month since last October. Up 18% from last July.We need continued export growth. It’s good to see China’s increased imports. Now that China’s hog price has hit record highs. A true reflection of decreased supply, it is logical China will import more pork.
We understand face to face trade talks between USA-China will be held in October. It would be nice for both countries to come to a common ground. 

Gene Editing

 Below is the link to MIT technology review article on Gene Editing in cattle. It’s a wake-up call for all pushing to take Gene Editing oversight away from the U.S. Food and Drug Administration. It seems in the race to expedited Gene Editing there could be serious implications. 
How much do we want to risk consumer Pork acceptance and demand with risky attempts at altering nature by Gene Editing and GMO’s? Click to learn more about:  Recombinetics Gene Edited Hornless Cattle Major DNA Screw-up  (English)  

Canada

 Meat Packers in Canada are asking for compensation from Federal Government due to China Import Meat ban. They are claiming $100 million in damages to date.  This pales in comparison to the losses of production that have been suffered for many months from market damage due to China tariffs on U.S. Pork, lowering Canadian Market Hog Prices because of related U.S. basis prices. The Canadian Government should be matching the U.S. governments’ compensation of $11 U.S. per head to producers. Canadian producers have suffered at least the $11 that U.S. producers are being compensated.  Many Canadian packers own hogs; the compensation to all producers would also help packers in this way as well. Even better get market opened back up to China! 

China Prices

 Last week Average China Hog Market Price was 26.9 rmb/kg = $1.73 U.S. liveweight. Highest Price was in Henan Province at 32 rmb/kg = $2.06 U.S. lb. liveweight. There is no doubt China’s pork supply has fallen and will fall further.  This from South China Morning Post quoting Chenjun Pan- Senior Analyst for Animal Protein at Rabobank. “Given the situation, we can expect the price to continue to go up at the same time, consumption to go down.” “This basic mechanism will help to slow down the ride in pork prices.” In our opinion there will be increased imports of pork and all meats to China.
The U.S. increase of Pork to China/Hong Kong in July is an indicator of what’s coming. China’s hog price has close to have doubled since July 1st. The need for imports continues to rise.
  
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Alberta Pork
info@albertapork.com
780-474-8288