Pork Commentary Jim Long President-CEO Genesus Inc. November 21, 2022
U.S. hog marketing continues to run lower than a year ago. This past week 2,605,000, the same week a year ago 2,632,000 (YTD -2.9%). Maybe more significantly Iowa – S. Minnesota hog weights averaged 283.8 lbs., a year ago 290.3 lbs. – that’s 6.5 lbs. lower year over year. Maybe 1 million hogs have gone to market ahead of last year’s pace. You only market them once.
The lower weights are probably a reflection of higher feed costs, producers shipping aggressively for cash flow, and trying to get ahead of the lower December market. Packers willing to buy hogs is a reflection of solid domestic demand in the face of what has been a challenging pork export market.
Other Observations
Hog price is in the high 80s, a year ago lean hogs were below 60¢ lb. ($40 per head difference). It wasn’t before March of this year that hogs reached the high 80s. A reflection of current demand relative to supply.
Hams are helping hold prices. Hams closed Friday at $1.03 lb., a year ago they were 75¢ lb. When Hams make up about 25% of the carcass this is helping hog prices relative to a year ago. Ham demand is being helped by Avian Flu decimating Turkey supply leading to Pork Ham consumer substitution and strong demand from Mexico. Last week 60% of U.S. Pork Exports sales were to Mexico.
Avian Flu is continuing to hit poultry hard. Over 50 million birds of all types have been exterminated. This has cut the poultry meat and egg supply. Combined Regional Large Weekly Average Prices – $3.30/dozen, a year ago 90¢/dozen. It appears that you can keep Avian Flu out of your layer flock egg business a lot better than a year ago. The average cost of frozen Turkey this year is $1.46 lb., and last year $1.15 lb. Less Turkeys + demand = higher prices. Turkey – $1.46 lb. – Pork Hams $1.05 lb.
Cash early wean pigs have started their usual seasonal increase. A few weeks ago, they were $30, this past Friday the USDA data indicated last week’s average cash price was $41.90. A year ago, same time they were $51. We expect continual price increases next couple of months. Some have predicted to us over $70 plus. With less sows in the USA than a year ago, we expect demand will be strong.
We have written continually since last October that the EU would have major sow liquidation of up to 10% of the sow herd (I.E., 1 million sows). Last week Statistic Denmark released data that shows major liquidation in their country. 11.9 million pigs in inventory. Down 10% from a year ago. Sow herd is down 9% from a year ago at 939,000. All these numbers are a reflection of the financial losses incurred in the Danish industry (EU industry). The sow herd was down 3% last quarter a reflection to us that liquidation continues. Since its peak 2 years ago the Danish sow herd has decreased by 13%. One thing is for sure less sows = less pigs. There will be significantly fewer pigs in Europe in 2023 which will support local and export markets.
U.S. – Canada Packers have been having a real challenge to maintain profitability. A reflection of this reality is Tyson’s pork division third-quarter operating losses of $55 million. We don’t believe Tyson is an outlier it’s just that they are a public company and release its financial data. When we talk to Packers there is a general feeling “there’s no joy in Hogville”. We need not only need a financially strong production sector but also Packers to have a sustainable vibrant industry.
China’s national average hog price last week was 25.35 RMB/kg = $1.60 U.S. lb. liveweight. A 275 lb. market hog = $440 U.S. China early weans $83.11 U.S., 35 lb. feeder pigs $96.39. Strong prices are a reflection of demand and less hogs.
Last week Financial Post published an article on China. It was a repeated Pork business. We were quoted but some other quotes included:
“The elimination of sow production capacity may be larger than the current market imagined,” said Guan Yilin, analyst at Cofco Futures. (Cofco is either the first or second largest importer of Pork to China).
“The reported total number of sows is inflated,” said Zou Zhihong, China manager of U.S. farm equipment supplier Hog Slat Inc. (One of the world’s leading Swine Equipment and building companies).
“A lot of barns are still empty,” he said.
“If there were so many pigs, the price couldn’t reach this year’s dramatic level,” said Xiao Lin, analyst at Huachuang Securities.
“I expect more shipments to arrive in Q4,” said Pan Chenjun, senior analyst at Rabobank, adding that 2023 imports will be higher than 2022.
We stated early last fall reporting the massive sow liquidation ongoing in China. We were kind of a small voice in the wilderness but it seems liquidation did happen. China hog prices are extremely high a reflection of that liquidation. Even Rabobank now thinks there will be more pork imports. With less pork now in the USA and Europe. We expect the reality of China’s increased imports will rocket charge EU – USA prices. No doubt in our mind U.S. hog prices will surpass $1.20 lb. this coming summer. Crazy not to think so as we passed $1.20 the past two summers. Now fewer hogs in EU – USA and demand will be in China the world’s largest importer of Pork. U.S. summer lean hog futures at $1.05 lb. are significantly undervalued in our opinion compared to where the market will end up.
Jersey Red Duroc
Genesus has believed for over two decades that as an industry we should be producing pork that is more marbled, redder, and juicier – Taste matters. Our Jersey Red Duroc continually dominates taste tests globally. The link below is Genesus’ Chef Glenn Mckenzie Smith preparing Genesus Jersey Red Duroc pork. If as an industry we are going to grow pork demand we need to deliver a better eating experience. When is it bad business to have a better product?
Editor’s note: Chantal Farmer is a research scientist at Agriculture and Agri-Food Canada’s (AAFC) Sherbrooke Research and Development Centre. She can be contacted at chantal.farmer@agr.gc.ca.
Today’s greater size of piglet litters presents a problem for sows when it comes to producing enough milk. Dietary lysine is a potential solution.
Without nutritional approaches to benefit performance, sows do not produce enough milk to sustain optimal growth of their litters. This is especially challenging considering the advances in genetic lines to produce litters of greater size than ever before. This situation presents a major problem for the hog industry, making it imperative to develop strategies to increase the amount of milk available to suckling piglets.
Lysine is the first limiting amino acid in most swine diets, and it is most important during late gestation when the majority of fetal and mammary growth occurs. ‘Mammogenesis’ refers to the process during which pigs grow milk-synthesizing tissue. During this critical period of time, however, it is not known which specific amino acids are required to fully support this essential process. Recently, a project was carried out at Agriculture and Agri-Food Canada’s (AAFC) Sherbrooke Research and Development Centre to determine the impact of a 40 per cent increase in lysine intake from days 90 to 110 of gestation in gilts on their mammary development.
Milk-synthesizing tissue matters for sow milk yield
Figure 1: Increasing sow milk yield via greater mammary development
The number of mammary cells present at the onset of lactation is considered the main factor for determining sow milk yield potential (Figure 1). Rapid mammary development occurs at three distinctive periods in the life of a pig, and it is only during these periods that it is possible to stimulate mammary growth using nutritional or other strategies.
The first period of rapid mammary development takes place before puberty, starting at approximately 90 days of age. The second period is during late gestation (from 90 days of gestation to farrowing), while the last period occurs in lactation. Nutrition in late gestation holds much promise to increase the number of milk-synthesizing cells before lactation starts.
More lysine potentially means more milk
Table 1: Mammary gland composition of gilts fed a control diet or a lysine-supplemented diet (HILYS) from days 90 to 110 of gestation
To test the impact of lysine during late gestation, gilts were fed 2.65 kilograms of either a conventional diet providing 18.6 grams per day of standardized ileal digestible (SID) lysine, or a diet providing 26 grams per day of SID lysine with the inclusion of additional soybean meal. Both diets provided the same amount of energy.
Feeding 26 grams per day of SID lysine increased the weight of milk-synthesizing mammary tissue by 44 per cent, whereas the weight of the outside fat layer of the mammary tissue was not altered (Table 1). The composition of the mammary tissue was generally not affected by dietary treatment; however, greater total amounts of each tissue component, such as protein and fat, were present due to the heavier tissue weight.
These findings suggest that a greater uptake of lysine in supplemented sows supports enhanced growth of milk-synthesizing tissue. It is worth noting that the beneficial effects of added soybean meal could be due to an increased protein content or to greater concentrations of amino acids other than lysine.
What the data suggest is that increasing lysine by 40 per cent from gestation day 90 onward, as part of a two-phase feeding strategy, could benefit potential sow milk yield during lactation.
Current recommendations not enough
The results of this study indicate that the current recommendations for including lysine during late pregnancy in pig diets are under-estimated. By providing 40 per cent more dietary lysine, with added soybean meal, producers can effectively stimulate the growth of milk-synthesizing tissue, leading to better milk production in their sows, for the benefit of today’s large piglet litters.
Editor’s note: Carl A. Gagnon is a veterinary scientist at the University of Montreal’s Swine and Poultry Infectious Diseases Research Centre. He can be contacted at carl.a.gagnon@umontreal.ca.
PRRS is estimated to cost the U.S. industry nearly USD $700 million (CAD $950 million) annually. Combining various jurisdictions in Europe, the total reaches more than €1.5 billion (CAD $2 billion) each year. Recommendations for preventing the spread of PRRS are identified in several parts of the Canadian Pork Excellence (CPE) program manual’s section on biosecurity.
Porcine Reproductive and Respiratory Syndrome (PRRS) results in reproductive failure, late-term abortions, an increased number of stillborn fetuses or the birth of premature and weak piglets. This global phenomenon also leads to increased morbidity and mortality in growing and finishing pigs as a result of severe respiratory disease and poor growth performance.
As PRRS continues to take a large toll on the swine industry in terms of animal health and lost revenue, an effective anti-viral treatment for the disease has remained elusive. One potential solution to this problem includes the use of a substance derived from Actinobacillus pleuropneumoniae (“App”) – a pathogen responsible for about 20 per cent of bacterial pneumonia in pigs, causing inflammation of the lungs and, potentially, death.
In this particular case, perhaps surprisingly, the pathogen is beneficial. By studying the co-infection of PRRS virus and App, which occurs naturally in pigs, it has been demonstrated that heat-resistant App-secreted metabolites have a positive anti-viral effect against the PRRS virus, but, until recently, the specific metabolites responsible were unknown.
As such, it has become necessary to find out which App metabolites are behind this anti-viral effect, to further isolate and test them. If it is possible to isolate and test those metabolites, it may offer a potential solution for combatting PRRS virus at the cellular level.
Taking a closer look at App metabolites
Immunofluorescence comparing a PRRS virus sample to a sample of PRRS virus mixed with App shows that the latter has a significant anti-viral effect versus the control ‘mock’ sample (with no infected cells).
Targeted mass spectrometry has made it possible to take a closer look at how a certain PRRS-infected porcine cell line reacts when exposed to App. By using untargeted spectrometry, it is possible to examine a wider spread of potential culprits.
After analyzing mass spectrometry data, various App metabolites stood out. All of the top-five App-secreted metabolites were adenosine nucleoside analogs – a class of metabolites widely known to have anti-viral properties. Fortunately, many adenosine nucleotide-based drugs are commonly available to treat other human viruses, with extensive research promoting their use.
The identified metabolites were further analyzed to better understand the concentration at which they are most effective in response to PRRS virus infection. Three of the five metabolites subject to analysis proved efficient in reducing the growth of PRRS virus in cell culture, which is good news, at least in a lab setting.
Existing drugs could act as PRRS anti-virals
Adenosine nucleotide analog anti-viral drugs act against certain human viruses – including strains of Hepatitis and HIV – to limit their growth. These drugs function similar to how App affects PRRS, though the relationship warrants further investigation.
For application at the farm level, it is uncertain how practical it would be, at this time, to begin employing such anti-virals against PPRS, given the required concentration of metabolites. However, confidence remains, given the commercial availability of those comparable anti-viral drugs, providing hope that a PRRS anti-viral may be on its way before long.
Pork Commentary Jim Long president – CEO Genesus Inc. November 14, 2022
Last week we were in Sonora state in the Northwest of Mexico.
Our Observations
Sonora is a very dry–hot region with about 10 inches of rain annually.
The region’s crops depend on irrigation.
After 4 years of almost no rain (that’s a real drought) this year, there was significant rainfall that replenished the water levels in the reservoirs.
Sonora also has significant livestock and poultry production. Over the last 20 years, the pork packers of Sonora have developed a significant pork export market to Asia and have been the region that has led Mexico’s exports.
Currently, Sonora Packers are having a difficult time in the Asian markets. Mexico’s hog price is 46.46 pesos/kg or $1.08 U.S. liveweight/lb. equivalency in U.S. 66.76¢, Canada 59.08¢, Spain 75.27¢, Brazil 58.28¢. You can see the challenge. Mexico’s hog price is significantly higher than other major export countries. Asian buyers might be loyal to a supplier from long time relationship but this huge price spread is hard to overcome. It’s a real challenge for Mexico’ Pork Exporters.
On the flip side, the Mexico hog market price is very strong. The price spread to U.S. hog price is normally 8-10¢U.S./lb. Now it’s 40¢. This in itself reflects strong domestic pork demand and helps the export packers move product in their domestic market. The U.S. – Mexico price spread is also pulling large amounts of pork from the U.S. to Mexico. Over 40% of U.S. pork exports go to Mexico. One Mexican packer asked us how soon would U.S. hog price increase. They want high U.S. hog prices, as do U.S. producers.
In Mexico, there is consolidation of production like in all other parts of the world. Bachoco a major poultry and egg producer is acquiring swine production and packing in a major way. One thing unique in Mexico is packer groups have their own retail outlets to sell the product. These include Yoreme, Ojai, and Kowi groups in Sonora. Something we see not only in Mexico but in other parts of the world. We are not aware of any significant retail stores by U.S. or Canadian integrators.
We understand Mexico has between 1 – 1.2 million sows. Similar to Canada’s production. The population of Mexico is about 130 million people. The new sow herd consolidation as old sow barns are closed and new sow barns supply existing nursery – finishers. With 130 million people, any increase in per capita consumption is a lot of extra pork needed.
In Sonora, we had the pleasure to speak at the XXIX Congress held in Álamos.
Álamos is a colonial town built in the 1600s beside a major gold mining site. A town today of about 25,000 people its buildings reflect the construction 300 years ago. It’s quite a nice place to visit and observe.
The swine congress was well organized and well attended. There were speakers on many swine subjects from 9 am – 8 pm over two days. The speaker sessions were well attended.
In our talk we made some points:
Mexican producers should be glad they are a pork export country. Import-country pig prices are all significantly higher than export countries, i.e., U.S. liveweight/lb. Mexico $1.08, China $1.69, Korea $1.76, Philippines $1.27 compared to Brazil 58.28¢, U.S. 66.76¢, Canada 59.08¢. Warning – if you want to become self-sufficient in pork and export – expect lower prices – i.e., be careful for what you wish for.
World pork production led by China, the EU, and U.S. has declined and will stay there for at least the next 12 months – positive for Mexican producers.
Mexico’s government has stated that in 2024 there will be no GMO – Corn imported into Mexico. We asked the approximately 150 attendees in our talk to raise their hand if they believed GMO – Gene Edited Pork should or will be allowed to be imported and sold in Mexico. One person raised their hand. What was kind of interesting is the numerous PIC representatives in the room, but none of them raised their hand. Over 40% of U.S. pork exports go to Mexico. Maybe a good idea to see if there is a market for GMO – Gene Edited Pork before we rush head first into a pork demand-destroying scenario.
We also talked about Pork Quality i.e., Better Tasting Pork. Our premise to drive pork demand we have to put “The Other White Meat” program in the cemetery. Pork is red meat. Beef is 2.5 times the price of Pork. Producing Pork that has more marbling, darker red with better water holding capacity in our opinion enhances taste – flavor, and opportunity for higher pork prices.
We told the story of the Dutch Genetic company that had a customer appreciation dinner a week ago in Canada. Sadly, they served roast beef. Maybe a testament to pork eating attributes of their swine genetics? Truly a sad story for our industry. Why would we produce Genetics we don’t want to eat and then expect consumers to eat the same sad product? No wonder per capita pork demand has flatlined. We need to address consumer demand – better taste is what they want – no other reason bellies and ribs lead the pork-cut-out values. Marbled – better taste.
After we spoke a Mexican producer told us there is an annual pork industry meeting in Sonora. He said they serve beef. It’s a global problem that we need to improve our product to one that we wish to consume ourselves. It’s so obvious but we continue to ignore the reality of demand driven by taste.
Summary The hospitality of the Mexican producers was excellent. They have good hog prices but feed prices are high. It’s a dynamic industry that is committed to having its place in the Global Pork Industry.
Pork Commentary Jim Long President – CEO Genesus Inc. November 7, 2022
Our observations
This year’s slaughter weights compared to last year are startling. A week ago, Iowa – S. Minnesota average hog weights were 284 lbs. a year ago same week 289.6 lbs. A massive difference of 5.6 lbs. When you consider the last few weeks each and every week the U.S. has had year-over-year lower market numbers which put it in greater perspective. Some farmer arithmetic. U.S. markets now about 2.6 million head a week, assuming 7 days of production = 350,000 head per day. 5.6 lbs. ÷ 2.2 lb. A.D.G = 2.5 days x 350,000 head = minimum 700,000 probably dead ahead due to lighter hog weights. This is bullish, they only die once.
Huge week for U.S. Pork Export Sales. 47,940 Metric Tonnes, was the highest since January. China 11,220 MT. Japan 9,270 MT. Mexico’s 12,750 MT led the way. We all need to watch China; we expect increased sales due to their pork shortfall. China sales year to date has been about 3,500 MT a week.
Mexico is over 40% of U.S. Pork Exports. Last week Mexico’s hog price was 46.49 pesos/kg ($1.08 U.S. liveweight/lb) U.S. price 93.73¢ lb. lean (69¢ live). The difference of 39¢ lb. U.S. liveweight or about $100 per head. We have been doing business in Mexico for the last 35 years. Usually, the U.S. – Mexico price spread 8-10¢ lb. with Mexico higher. The current price spread is historically high. We expect this huge price difference if continued will pull even more pork from the U.S. to Mexico.
This week we are in Mexico speaking at the XXIX Congress in Sonora. We will report our observations in next week’s commentary.
We understand close to 90% of U.S. grain shipments go through the Mississippi Rover system. We are all aware of shipping problems due to low water levels in the river. If this continues it’s not hard to imagine corn-soybean futures basis declines as the market prices respond to increased shipping costs or the inability to export will be taken off from grain–soybean source locations.
As of October 27th, corn shipments this export season are down 30% from last year’s. Last week’s shipments were 17.7 million bushels, the USDA has projected the U.S. to export 45.6 million bushels per week this crop year. Projected totals for this year are 2.150 billion bushels. Doesn’t take an ag-economist to figure that 17.7 million a week will leave lots of corn in the USA compared to projections.
USDA is projecting more pork produced in the USA next year due to more hogs and heavier carcass weights. Hard to believe with smaller sow herd, sow slaughter at liquidation levels and hog weights currently 5.6 lbs. lower year over year.
GMO – Gene Editing
Last week we wrote our concerns about consumer acceptance of GMO – Gene Edited pork. We cited some examples to consider before we blindly rush into what could ultimately crush demand.
A person wrote us wondering if we were against science. To be clear we aren’t. We are against pork demand issues of self-inflicted hurdles. It doesn’t matter if the science works if consumers won’t accept the product.
Made us think about COVID. There is a vaccine. We have heard for two years Government – Science telling us its safe. Scientists tell us it will curtail sickness and death. It’s been pounded repeatedly with huge amounts of Government money delivering the message over and over.
According to U.S. Centers for Disease Control and Prevention, 79% of the U.S. population got one dose of COVID vaccine. That means 69 million Americans chose not to get the vaccine. Science says it’s safe, what happens if the same 69 million (21% of the U.S. population) don’t trust the science of GMO – Gene Edited pork? Crushes demand.
What retailer–restaurant chain selling pork would want to try to explain to 21% of U.S. consumers the science says it’s safe? Good luck.
The Iowa State survey of 2,000 U.S. consumers had around 60% of women saying “they would be unwilling to eat and purposely avoid gene-edited foods.”
One would wonder if the National Pork Board – National Pork Producers Council should be doing large surveys of consumers and then realizing the data on GMO – Gene Edited retailer, consumer, and export acceptance.
Wonder how that would work when the National Pork Board does joint financial projects with PIC (GMO – Gene Editing Champions) on swine climate issues. Who’s paying? The joint press release did not indicate how much is being committed by either party. Interestingly since Producer Checkoff money is being used there is no transparent announcement of funding commitment.
Seems the National Pork Board seems it’s necessary to participate in PIC projects with the advocate of GMO – Gene Editing. Where is the effort to survey U.S. consumers re. GMO – Gene Editing?
The National Pork Board Checkoff collects over $50 million a year. The money is there to do the GMO – Gene Edited surveys. Why is this not happening? Who’s running our industry? Ask your National Pork Board Director and your National Pork Producers Council director what’s being done to survey consumer, retail, food service, and export acceptance of GMO – Gene Edited pork. It’s a fair question. One we should be dealing with sooner rather than later.
The University of Calgary’s Faculty of Veterinary Medicine (UCVM) Diagnostic Services Unit (DSU) is undergoing a transition to serve not only students but the broader livestock industry.
Livestock disease outbreaks are never good but having the right resources to detect and defend against disease is critically important for the entire pork value chain.
The University of Calgary’s Faculty of Veterinary Medicine (UCVM) Diagnostic Services Unit (DSU) opened in 2010 and offers fee-for-service testing. In 2020, through the Enhanced Livestock Diagnostics pilot project, the fees became Alberta-supported for livestock submissions, resulting in more affordable costs compared to shipping out-of-province.
Located in northwest Calgary, at the university’s Spy Hill campus, samples are received during regular business hours with after-hours drop-off available around the clock, seven days a week, excluding the Christmas break. Most preliminary results are received within two days, depending on the type of diagnostic test. This shift toward industry diagnostics broadens the lab’s previous focus, which was aimed more toward students and research.
“We can test any species that isn’t human, including wildlife,” said Lindsay Rogers, Program Outreach Coordinator, DSU. “Under the terms of our grant, several species of production animals are covered, including pigs, cattle, poultry, sheep, bison, elk, deer and other species.”
With funding through the Canadian Agricultural Partnership (CAP) and Results Driven Agriculture Research (RDAR) until 2024, use of the DSU has seen a significant uptick since transitioning.
“The DSU acts as a hub for vets, so we don’t have to look for different labs,” said Rienske Mortier, Veterinarian, Prairie Livestock Veterinarians. “It’s very convenient, and the lab staff have a great sense of communication with us.”
For producers, having a direct diagnostics pipeline should be reassuring, as time is of the essence whenever clinical signs of disease are observed in a herd.
“What the DSU offers for producers is a close-to-home, timely outlet for confirming or negating the presence of a pathogen,” said Javier Bahamon, Quality Assurance and Production Manager, Alberta Pork. “One of the most difficult parts of disease investigation is nervously waiting on results, but DSU cuts this time dramatically for detecting diseases.”
Not only as a threat to animal health, livestock disease can have implications for food safety and international trade. As such, disease detection and surveillance are crucial for the industry.
Diseases differ, detection stays the same
The DSU lab includes an after-hours, secure, climate-controlled drop-off locker for samples delivered by vets.
Depending on the suspected disease, it may be reportable or notifiable at the provincial or federal level of government. ‘Reportable’ diseases are those that pose significant threats to animal health, public health or food safety, requiring a response to control or eradicate. ‘Notifiable’ diseases are those that are monitored for changes or unusual trends.
Federally reportable diseases affecting pigs include, but are not limited to, African Swine Fever (ASF), Foot and Mouth Disease (FMD) and Trichinellosis, while provincially reportable diseases in Alberta would be forms of swine coronavirus, including porcine epidemic diarrhea (PED), delta coronavirus and transmissible gastroenteritis (TGE). Alberta’s 2019 outbreak of PED, pre-dating the transition of the DSU toward industry diagnostics, was confirmed three days following sampling. If in-house PCR testing is established at the DSU, improved turn-around times for cases such as these would be likely.
“We are obligated to pass information on to the provincial or federal government in the case of a reportable or notifiable disease, but the advantage for vets and producers is response time,” said Rogers. “Moreover, anonymous data from investigations makes its way back into educating our students, who will become the next generation of professionals in the industry, so it’s a full-circle process.”
Even when tests return negative results for a suspected pathogen, the information adds to the knowledge of animal health status across the province, which has value for disease prevention.
“We’ve performed thousands of tests at high-traffic pig sites for nearly eight years,” said Bahamon. “The vast majority have come back negative, and with the added capacity of the DSU, testing is easier and more affordable than before.”
Following the completion of a test, the DSU bills the herd vet, and the herd vet then bills the producer. Because the DSU operates with grant funding, Alberta-based vets are offered services at a discounted rate, which may be passed on to their producer clients. The financial incentive alone ensures producers are not stuck with additional on-farm costs, and it lowers the price tag that is often inevitable with herd health monitoring.
“It’s win-win for producers,” said Bahamon. “Your vet helps you, the lab helps the vet, and quicker testing can result in potentially quicker disease response.”
Less guessing, more checking
Clinical signs of one disease can often be indistinguishable from another, making testing an invaluable part of the process. This pig was seen coughing, then sampled and tested at the DSU. As it turned out, the barn had an influenza-related outbreak.
Symptoms of disease can be confusing, even for vets. Often, they are straightforward enough to be observed with the naked eye or based on changes in productivity, but it is impossible to be sure of disease without testing.
“It’s sometimes possible to accurately guess what’s going on in a barn, but you never know until you test,” said Mortier. “If I think something is viral, and I’m not sure what it is, I can still send it to the DSU and get a better idea. I don’t have to discriminate, which is the nice thing.”
In fact, Mortier has had positive disease cases confirmed by the DSU.
“Breaks of diarrhea in nursery barns with piglets are not totally uncommon, so I wasn’t sure what was going on in one particular instance,” said Mortier. “I sent a bunch of samples to the lab, and within the day, they were able to tell me the issue was Salmonella. I had to immediately inform the barn about the problem and create a plan of action. After that, follow-up testing was done for further analysis and to determine a path forward.”
In livestock, various types of Salmonella infection are provincially reportable in Alberta. When consumed by humans, Salmonella can present a major risk of foodborne illness. Between 2020 and 2022, the Government of Alberta reported nearly 70 cases of Salmonella enteritidis in livestock, but numbers can be deceiving. Is a high number a good thing or a bad thing? Ultimately, any number of disease cases discovered creates an opportunity for positive change.
“It’s better to know than not know,” said Mortier.
Going forward, Alberta Pork hopes for continued support for the DSU, given its value to producers.
“We want to do everything we can to promote the services of the DSU for the benefit of our producers,” said Bahamon. “Producers and vets have a huge opportunity to leverage the potential of the DSU to improve their own operations and protect the industry at large.”
Currently, nearly half of all cases referred to the DSU required polymerase chain reaction (PCR) testing as a secondary step to verifying samples; however, this capacity does not exist in-house.
“We do still have to send some samples out for validation,” said Rogers. “Additional capabilities within our lab and team would be required to streamline this process, but it would represent a desired improvement.”
For now, having a state-of-the-art livestock disease lab in Alberta, for Alberta producers, is a major plus when it comes to disease prevention and response. Pork industry partners and end-users, likewise, can have confidence that the value chain’s ability to manage pig health is strong and getting even better.
Strict biosecurity protocols and closely monitored traceability systems protect the pork industries of both Australia and Canada. This infographic, from the Government of New South Wales, discourages feeding food scraps to pigs – consistent with how the issue is viewed in Canada.
When it comes to mitigating the risk of disease and responding to threats in the global livestock industry, the importance of biosecurity and traceability cannot be overstated. But while herd health and food safety rely on factors primarily related to the conditions of pigs and pork, challenges in these areas are mostly human-created, while solutions are exclusively human-oriented.
The Canadian pork industry prides itself on a high degree of quality assurance, which includes a traceability pillar and biosecurity recommendations. This is a hallmark of excellence respected by our global partners. In Australia, similar accountability exists in this regard, with an even greater emphasis on biosecurity, for natural reasons.
Due to geographic isolation, Aussies have long been keen to protect their country’s unique and complex flora and fauna, and this emphasis on ecology has also benefited agriculture, promoting a widespread appreciation for disease prevention measures. Traceability represents a functional component that supports biosecurity by documenting animal movements and making surveillance possible, which protects the industry and the environment alike.
When it comes to production, Canada counted more than 14 million pigs on-farm in 2021, while Australia counted just over two million. On the flip side, Australia beats Canada by far when it comes to lamb and sheep. Both countries have a considerable beef cattle herd. Despite obvious differences in magnitude, when it comes to livestock species, Canada and Australia remain significantly export-dependent red meat producers, which demands comprehensive and reliable animal tracking.
Comparing and contrasting systems
In late August, Alberta Pork met with pre-eminent traceability and biosecurity expert, Beth Green, who works for the Government of Western Australia and is researching global traceability systems to fit livestock production and handling in her country.
Beth Green, Manager, Livestock Identification and Traceability, Department of Primary Industries and Regional Development, Government of Western Australia visited Canada recently as part of a four-country tour to exchange information about traceability and biosecurity system design. Her trip was made possible thanks to a fellowship through Australia’s Winston Churchill Trust, which provides opportunities for Australians to travel overseas to conduct research in their chosen fields. She began in Scotland, then moved on to Canada, the U.S. and finally to Uruguay in an effort to bring home a better understanding to enhance Australia’s livestock industry, while offering her findings to those she visited.
Green’s position means she plays a key role in managing the National Livestock Identification System (NLIS) for her state in Australia’s national traceability platform, which includes electronic or visual ear-tagging of all livestock, similar to the process in Canada. Tags or, in some cases, tattoos, are tied to a ‘Property Identification Code’ (called a ‘premise ID’ in Canada) and recorded in a central database to track movements, known as PigPass. All movements from one property to another require the use of ‘waybills’ (called ‘manifests’ in Canada), providing information on movements, which is required to be directly inputted into the system on arrival at the destination. Waybills can be accessed electronically or provided manually, depending on how they are generated.
A key difference between Australia’s PigPass and Canada’s PigTrace is the obligation of the receiver to directly input traceability data into the national database.
In Canada, pig receivers are obligated to submit handwritten or typed manifests by email or fax to their respective delegated authority by province, which is then manually added into PigTrace. The federal Health of Animals Regulations, under the Heath of Animals Act, allow a seven-day window for traceability data to be reported. In Alberta, like Australia, the length of time to report a movement is 48 hours, as defined by the province’s Swine Traceability Regulation, under the Animal Health Act. Alberta Pork is the delegated authority for managing the province’s traceability, which is then fed into PigTrace – unique among provinces.
But what about when a receiver is reluctant to cooperate or perhaps does not view traceability as a priority? While the legal requirement is clear, bad actors can sometimes slip through the cracks, unless someone is watching.
“We have worked hard to drive up our compliance numbers,” said Charlotte Shipp, Industry Programs Manager, Alberta Pork. “Many of the provincially inspected plants, representing just a fraction of all hogs, just needed a bit of encouragement and support to see why this is important.”
While paper-based manifests are not always the most convenient option, Alberta is taking steps to pilot an electronic manifest (‘e-manifest’), which has recently been adopted by the Olymel plant in Red Deer and the Maple Leaf Foods plant in Lethbridge. Together, these plants represent upwards of 90 per cent of pigs processed in the province.
In Australia, recognition of compliance could even lead to better business.
“As a regulator, the government makes available a report that identifies abattoir performance, in terms of traceability compliance,” said Green. “Compliance could potentially be used by processors to promote their products within the retail market, which would ultimately benefit the producers from whom they purchase livestock. If you’re a producer meeting your requirements, you might look at that kind of consumer marketing and think, ‘That’s where I’m going to sell next time.’”
Despite nuances between systems, both countries have worked hard to establish traceability best practices over the years, as their international customers have come to expect this level of detail. Effective traceability is the cornerstone of modern food production, and the Canadian and Australian pork sectors certainly meet that expectation.
Travelers pose a significant risk
For some Australians, a trip to Bali, Indonesia, is a party-going rite of passage; however, the island is known to have Foot and Mouth Disease (FMD). Should the disease enter Australia as the result of a careless vacationer, it would be devastating for the livestock industry. Screening for FMD upon re-entry into Australia has intensified, in light of this recent increased risk.
Both Canada and Australia have laws in place that are designed to deter bringing foreign food and animal products into the country. But for any casual observer of human nature (or anyone who has seen border control-style television shows), it should come as no surprise that some daring or unthinking travelers still take the risk of facing a fine and having their contraband products confiscated upon arriving at customs, especially via air travel.
African Swine Fever (ASF) and Foot and Mouth Disease (FMD) are very concerning for the Canadian and Australian livestock industries. Both countries are currently free of both diseases, thanks to the diligence of frontline human and canine workers who figuratively and literally sniff out offending luggage and parcels, including those sent through the postal system.
Earlier this year, the United Nations’ Food and Agriculture Organization (UNFAO) released its summary of findings from an investigation into the risk of ASF transmission to the Americas. The report concluded that the likeliest form of entry for the virus remains the movement of illicit pork products from ASF source countries. While no ASF-positive pork products have ever been found at Canadian ports of entry, in several instances, Australian authorities have detected and apprehended goods that contained unviable viral fragments of ASF and FMD. While these unviable viral fragments do not pose a direct risk, their detection demonstrates how easy it might be to bring livestock disease into the country.
With ASF present in the Dominican Republic and Haiti since last year, this has been a cause for much concern in North America. While the Dominican is not the top international travel destination for Canadians, direct flights from Toronto to Punta Cana take place on a weekly basis.
In Australia, the tiny island nation of Timor-Leste, off the country’s northern shore, is teeming with the disease, though not much traffic occurs between the countries. When it comes to travel frequency, however, the island of Bali, in Indonesia, represents a significant FMD threat to Australia.
“Bali is the Western Australian winter holiday playground,” said Green. “Despite warnings, some returning travelers are still bringing food with meat from Bali into Australia, which is unfortunate.”
Whether it is ASF, FMD or any other livestock disease, this liability appears to have been adequately addressed by both countries so far, but extreme vigilance must continue to ensure our industries are protected.
While humans are unrivalled in our ability to contaminate what we touch, wildlife, unlike domestic animals, are also capable of moving great distances of their own volition and may be considered the second-greatest threat for transmitting disease.
The wild boar issue in Canada has received a growing amount of attention in the past year, thanks to a combination of industry outreach, outspoken academics and government officials, and coverage in mainstream and agriculture news media. In Canada, wild boar are largely the result of an ultimately wrongheaded attempt at livestock diversification that took place much more recently, starting in the 1980s. They jeopardize livestock, crops and the environment, and there are growing efforts to track, trap and eradicate them across western provinces.
“Alberta is on the frontline of this complicated battle, but we are committed to the cause,” said Shipp. “We have seen the devastation experienced in other places in the world, and we’re working hard to avoid that here.”
A report commissioned in 2020 suggests feral pigs cost an estimated AUD $100 million (CAD $90 million) annually to the Australian economy, with the largest concentration in the northeastern state of Queensland.
But many Canadians, including those in the hog industry, are likely not fully aware of the situation in Australia, including the presence of non-native deer and buffalo species, and even camels.
Prior to possessing a widespread understanding of invasive species, deer and buffalo from Europe and Asia were imported to Australia in the 19th century as game, while camels were brought from India around the same time for transportation reasons. Today, they are a major headache.
Regardless of which animal is causing havoc, it stands to reason that the scientific communities in Canada and Australia have become much more vocal in their efforts to educate the public on why pests are a problem, and it is incumbent upon industry partners and decision-makers to continue controlling invasive species to minimize their impact, wherever they are found.
Commonwealth connection spans continents
Earlier this year, Australian Pork launched an app that assesses the biosecurity risk of any farm visitor in less than 30 seconds. The app and the company that developed it are called ExoFlare, based in Australia.
An obsessive focus on traceability and biosecurity can sometimes come off as overbearing or simply unnecessary, but by concentrating on enhancing knowledge of the system, improving its delivery and encouraging participation, even doubters can be converted to believers.
“Sharing information helps everyone,” said Green. “We all know that there are market considerations when it comes to these things, but it isn’t a contest when we’re talking about animal health and protecting agriculture. We all want the same thing in that space.”
For its part, Alberta Pork has taken away a better sense of how Australia handles traceability and biosecurity, and the organization hopes the information shared back with Australia will benefit that country, likewise.
“It was a great opportunity for us to showcase how Canada is progressing in this area,” said Shipp. “This was a unique chance to create a new connection that will hopefully help us, going forward.”
This spirit of cooperation bodes well for both Canada and Australia, and the recent meeting of minds between passionate industry representatives has proven fruitful in terms of furthering discussion and understanding.
Pork Commentary Jim Long President – CEO Genesus Inc. October 31, 2022
Observations
U.S. hog marketing’s last week was 2,557,000, the same week a year ago 2,552,000.
Iowa – S. Minnesota hog weights 284.1 lbs. a year ago same week 288.2 lbs. A difference of 4.1 lbs., a large difference. This lower weight tells us that packers got a good demand for hogs and want to maintain kill numbers while producers have willingness to ship. The hog inventory is current and you could argue a 4.1 lb. weight spread could indicate hog slaughter pulled ahead by 300 – 400,000 head. All bullish indicators.
U.S. pork cut-outs closed Friday at $101.34 a strong price for this time of year with a good number of hogs coming to market.
The latest weekly sow slaughter was 63,859 head. September sow slaughter was 258,000, and last year 251,000. Sow slaughter levels indicate to us that there is no sow herd expansion in the USA.
The U.S cattle herd continues to liquidate. More heifers and cows went to slaughter in September than a year ago (plus 90,000). Year to date about 700,000 more cows and heifers have gone to market than in 2021. The herd keeps getting smaller, there will be less beef in the future and which is supportive of pork.
USDA’s latest forecast for Global Meat Production in 2023
Beef 59.2 million tonnes (similar to 2022)
Pork 111.0 million tonnes (+1% compared to 2022)
Chicken 102.7 million tonnes (+1.8% compared to 2022)
Pork is the number 1 meat in the world.
We disagree with USDA’s projection that China’s pork production will increase by 2% in 2023. The liquidation of China’s sow herd won’t make that possible. USDA projected last year China’s production would decline by 14% in 2022, actually, it’s up 5% in the latest information. They also predict the USA up by 2023 1%. Not sure how this happens with the fact of a smaller U.S. sow herd year over year.
We continue with the view that the USA, China, and EU producing 75% plus of all the world’s pigs will be down in production in 2023. There will be less pork in the world in 2023 compared to 2022.
GMO – Gene Editing
The major swine genetic company in the world is betting heavily on the implementation of GMO – Gene Editing in the hope it will combat PRRS. They have spent 10’s of millions in this quest. It appears from industry discussion they have promised this technology to many producers. Seems many have been promised to be the first customers. We expect at some point (who knows when) the technology of GMO – Gene Editing could work.
The following comments are not about technology but the challenge of consumer and market acceptance.
We like you have much of our livelihood tied up in pork production. We like you are all in. The one thing we know is it’s better for business to have solid pork demand whether it be domestic or export.
The big question to us will consumers and markets accept GMO – Gene Editing technology in the food chain.
GMO – Salmon though legal has had big resistance from retailers and consumers. Most of the major U.S. retailers won’t sell the Salmon product i.e., Walmart, Costco, Albertsons, Kroger, Hy-Vee, H-E-B, Meijer, Target, etc. What happens when the same retailers take the same position on GMO – Gene-Edited pork?
Paylean (Ractopamine) is a legal product. There was no issue domestically about its use in swine production. China (one customer) announced it will not accept Ractopamine in pork. Then everyone falls over themselves not to use it, an effective ban. One customer and it’s over for a legal industry-accepted product. With Paylean you could stop immediately, what happens if you have GMO – Gene-Edited pigs? They won’t disappear overnight.
Mexico is the U.S. number 1 export market for pork. Year to date 539,000 metric tonnes. Total U.S. exports YTD 1,189,000. Over 40% of all U.S. pork exports to Mexico. This past week the Mexican government reiterated its position that it will no longer accept and import GMO corn in 2024. Seems quite a drastic position but nonetheless, what does it mean for the pork industry?
Are we to believe that if GMO corn is stopped that GMO – Gene-Edited pork would follow? Pork is directly consumed just as the Mexican government worries about GMO corn being consumed directly in tacos, burritos, etc.
Many in the Mexican pork industry wish to cut U.S. pork imports to support domestic prices. We would expect many could push for stopping GMO – Gene-Edited pork from being imported. A government that looks at stopping GMO corn could concur. The National Pork Board reports monthly how much exports do for the value of market hogs. We expect Mexico is a big part of this, what is our risk factor with GMO – Gene Editing?
Iowa State which most would agree is ag friendly did an extensive survey recently on Gene-Edited foods of about 2,000 U.S. consumers.
The survey found; “Around 60% of the women in the survey said they would be unwilling to eat and purposely avoid gene-edited foods.” Not exactly a demand-enhancing driver, is it?
To us GMO – Gene-Edited pork is full of landmines that could jeopardize pork demand, and decreased pork demand would crush profitability. We can’t figure out why retailers would jeopardize their own brand for GMO – Gene-Edited pork. Case in point the Vice President of McDonald’s speaking at the NPIC conference in Wisconsin; “Don’t ask us to explain GMO – Gene-Edited pork.” When the world’s largest restaurant chain says they don’t want to deal with negatives that could jeopardize its brand. To put it bluntly, why would they care about PRRS? They don’t own hogs.
Currently, the world’s largest swine genetic company is pushing the merits of GMO – Gene Editing. We respect that’s their right. The executives who run the company have financial pressures with their big stock devaluation (Genus plc stock down 53% in the past year) to get 10’s of millions invested in GMO – Gene Editing. The major shareholder’s Baillie Gifford, Wellington Management Company, abrdn, Capital Group, and BlackRock are not exactly pig farmers by nature, they look for returns. That’s their business and right.
For us though a swine genetic company, we are lifelong pig farmers we look at it differently. We need genetics that grows demand (better tasting pork) not products that could very really (GMO – Gene Editing) threaten demand.
Disease resistance is done in a natural genetic way through selection vs. GMO – Gene Editing is an alternative. GMO – Gene Editing we doubt will fix the huge prolapse problem and 15% plus sow mortality that is occurring in some genetics. After a while of blaming prolapses and dead sows on feed, water, management, etc. it gets old. GMO – Gene Editing won’t fix the dead sow issue.
Yes, we have an opinion. Our opinion is motivated by the reality that our hog prices are driven by demand. We are worried the mad rush to GMO – Gene-Edited pork could crush demand. As an industry, we should consider the risk factors vs. reward.
Whether it’s GMO Salmon – Retailers, Paylean – China, GMO Corn – Mexico, McDonald’s, Iowa State survey. We need to approach with eyes wide open.
Pork Commentary Jim Long President – CEO Genesus Inc. October 27, 2022
Friday to Friday, December lean hog futures were $6.88, and February up $7.10. A $15 per head gain.
We have written several weeks in a row that summer lean hog futures in the mid-’90s were borderline insane. Friday, June, July, and August closed $1.03 – $1.04. Right direction but a long way from the plus $1.20 we expect to see.
Last week’s U.S. Pork Export Sales report indicated 40,800 metric tonnes of pork sold. The highest weekly sales since March of this year. The last four weeks have averaged 35,000 metric tonnes. After weeks upon weeks this summer around 20,000 tonne average. The increase in export sales is supporting Hog Prices near a $1.00 lb. We expect as China and Europe’s hog production continues to decline the world’s pork importers will have to chase and pay more for pork.
China
In the U.S. the government releases oil reserves to curb inflation. In China, the government releases pork reserves to curb inflation. Obviously, pork is more important in China than in the U.S. Doubt if U.S. government leaders even know the price of pork, recognition of the importance of the U.S. pork industry can be seen in their reneging of CFAP 1 top-up payments. The same CFAP 1 top-up they paid to corn producers, the industry of $ 7.00-bushel corn.
The China hog price continues to rise despite the release of pork reserves. As we have written for months the billions of dollars lost by China’s industry from July 2021 to May 2022 was leading to massive sow herd liquidation. It did. This past week China’s hog price averaged 28.46 RMB/kg ($1.77 U.S liveweight lb.), on April 1 it was 89¢ lb. U.S. On the first of September, the price was $1.47. Despite several China releases of pork reserves, the price has risen 30¢ lb. or $80 per head. We expect huge amounts of pork to go to China to fill the void of the huge decrease in pork production.
Summary
U.S. stronger lean hog futures, cash hogs, and export sales are a reflection of the decline in U.S. and global production. Historically the hog cycle has next to no correlation to macro-economic conditions i.e., inflation, interest rates, and unemployment. We expect hog prices will reach new highs as we move into 2023 from lack of domestic and global supply.
A Passing of a Giant
On October 10 William (Bill) Prestage passed away from COVID issues, he was 87.
Bill Prestage started as a feed salesman in Michigan, he moved his family to North Carolina. Formed a partnership with Otis Carroll, then they built a large turkey and swine company. After Otis passed away in 1982, Bill sold his interest and started Prestage Farms producing Turkeys and Swine.
The Prestage Farms and Prestage Foods family of companies has five divisions across seven states with three processing plants collectively employing more than 2,300 employees and contracting with over 450 farm families. Prestage Companies produce 1.4 billion pounds of pork and turkey annually. Prestage has 178,000 sows on the Genesus World Mega Producer list.
A while ago I was in Prestage Corporate office in North Carolina. An office fitting for one of America’s largest family-owned meat protein companies. In the office, the reality of Prestage being a family business is obvious with large pictures of the Prestage family in the entrance and foyer. Bill and his wife Marsha, 3 sons, and 5 grandchildren are actively engaged in the business. A legacy that any patriarch and matriarch of a family business would treasure. In farming one of the strengths and benefits of our industry is the ability to have family of multi-generations working together and building business that can last for generations.
I never met Bill Prestage but about 35 years ago he spoke at the Michigan Pork Congress held in Battle Creek, Michigan. Bill was from Battle Creek so it was a homecoming. Already at that time, Bill had built a large farming organization. I can still visualize him speaking. It was clear, it was positive, and it was visionary of the future of the pig industry. A vision that came to fruition. I have heard many speakers but he was one of the few that was memorable.
Bill Prestage started with next to nothing. His hard work, vision, and salesmanship put together a team including his family that has built an agriculture empire. Quite the legacy. A giant in our time.
The following link tells a more complete story of William (Bill) Prestage:
Pork Commentary Jim Long President – CEO Genesus Inc. October 17, 2022
Last week U.S. hog slaughter was 2.545 million head, a year ago same week 2.630 million, down 3.3% year over year. Year to date -3.1%.
The latest Iowa – S. Minnesota slaughter weights were this week 282.1 lbs., a year ago 285.8 lbs. – 3.7 lbs. lower.
Less hogs, lower weight year over year. In line with inventory reports indicating fewer hogs from a continually smaller sow herd.
USDA calculation of Pork cut-outs was $1.01.86 lb. last Friday. The average net price of live hogs is 94.19¢ lb. Packers should now be making money. They had several months of tough sledding. Packers need to make money to have a sustainable industry.
China
We wrote for several months that the huge financial losses encountered by China’s hog producers would lead to fewer hogs. This week’s price is $1.76 lb. (28.24 RMB/kg) for a 275 lb. hog. On March 18th the price was 85¢ lb. On the 1st of September, it was $1.47 lb.
China has announced several releases of pork reserves in September – October. It isn’t enough to slow price increases, the decline in hog numbers is too good. Since the 1st of September up 29¢ lb. or $80 per head.
Hog futures in China reached a new contract high last week January 23,735 RMB tonne – 3,336,71 U.S. tonne ($1.51 U.S. lb.). We expect higher prices yet. As the supply of hogs continues to plummet. It’s not if but when China will begin with major pork imports to keep consumer prices from accelerating even higher. We expect feeding the people will trump hog producers making even more money. The industry had gone from losing $100 per head to making over $100 per head. There is a saying “surest cure to low prices is low prices.”
Poland
Poland’s latest swine inventory report is a reflection of the economics that is affecting the EU swine industry.
June
2021
2022
Difference
Breeding Herd (thousands)
724,000
606.4
-128,800 (-17.5%)
Pig Inventory (millions)
11.03
9.61
-1.42 (-12.9%)
In one year, a decline of 17.5% in the sow herd. We understand that liquidation has continued since June.
Liquidation is always a reflection of economics and lack of confidence is the future.
Pork – Taste
We had some international visitors last week who were pig producers in Asia. Before they visited, they were in Chicago and met some friends for dinner in a Morton’s (a very high-end steakhouse chain). They ordered the Pork Chop on the menu. It was $40, then you get to order potatoes, and vegetables separately. Fair to say $40 is an expensive piece of meat. The Pork Chop came and they didn’t like the taste, they brought another one, same story, bad eating. Kept that one but really disappointed.
It’s really bad as an industry we haven’t realized “The Other White Meat” has failed. We continually produce pork that doesn’t deliver a good eating experience. We miss so many opportunities to enhance demand with better-tasting pork. Bellies – Ribs that are heavily marbled continue to lead the pork cut-outs, values we all know why because they taste better. The same logic to put into loins and hams (50% of the carcass). More marbling will improve the taste.
For 24 years Genesus has worked on producing marbled pork at a competitive cost of production. It is in our total philosophy we must put consumers first. They are the customers. If each U.S. consumer ate pork one more time a month it would increase consumption by 7 million hogs per year. That’s real demand.
If we could increase global demand for a better eating experience it multiplies into 10’s of millions of more hogs.
Fundamentally we believe in a simple marketing concept “It’s never bad business to have a better product.” Better-tasting pork is a must for our industry to grow in demand.
Summary
With U.S. pork production down, Europe production down, China production down. We believe U.S. lean hog futures are significantly undervalued. Summer lean hog futures of mid 90’s makes a mockery of where prices will be next summer. We expect $1.20 plus.
U.S. Continues with Fewer and Lighter Market Hogs
Pork Commentary
Jim Long President-CEO Genesus Inc.
November 21, 2022
U.S. hog marketing continues to run lower than a year ago. This past week 2,605,000, the same week a year ago 2,632,000 (YTD -2.9%). Maybe more significantly Iowa – S. Minnesota hog weights averaged 283.8 lbs., a year ago 290.3 lbs. – that’s 6.5 lbs. lower year over year. Maybe 1 million hogs have gone to market ahead of last year’s pace. You only market them once.
The lower weights are probably a reflection of higher feed costs, producers shipping aggressively for cash flow, and trying to get ahead of the lower December market. Packers willing to buy hogs is a reflection of solid domestic demand in the face of what has been a challenging pork export market.
Other Observations
“The elimination of sow production capacity may be larger than the current market imagined,” said Guan Yilin, analyst at Cofco Futures. (Cofco is either the first or second largest importer of Pork to China).
“The reported total number of sows is inflated,” said Zou Zhihong, China manager of U.S. farm equipment supplier Hog Slat Inc. (One of the world’s leading Swine Equipment and building companies).
“A lot of barns are still empty,” he said.
“If there were so many pigs, the price couldn’t reach this year’s dramatic level,” said Xiao Lin, analyst at Huachuang Securities.
“I expect more shipments to arrive in Q4,” said Pan Chenjun, senior analyst at Rabobank, adding that 2023 imports will be higher than 2022.
Link to the Article:
https://financialpost.com/pmn/business-pmn/china-pork-imports-set-to-rise-amid-questions-around-hog-herd-size-2#:~:text=%E2%80%9CThe%20elimination%20of%20sow%20production,as%20600%20yuan%20per%20hog.
We stated early last fall reporting the massive sow liquidation ongoing in China. We were kind of a small voice in the wilderness but it seems liquidation did happen. China hog prices are extremely high a reflection of that liquidation. Even Rabobank now thinks there will be more pork imports. With less pork now in the USA and Europe. We expect the reality of China’s increased imports will rocket charge EU – USA prices. No doubt in our mind U.S. hog prices will surpass $1.20 lb. this coming summer. Crazy not to think so as we passed $1.20 the past two summers. Now fewer hogs in EU – USA and demand will be in China the world’s largest importer of Pork. U.S. summer lean hog futures at $1.05 lb. are significantly undervalued in our opinion compared to where the market will end up.
Jersey Red Duroc
Genesus has believed for over two decades that as an industry we should be producing pork that is more marbled, redder, and juicier – Taste matters. Our Jersey Red Duroc continually dominates taste tests globally. The link below is Genesus’ Chef Glenn Mckenzie Smith preparing Genesus Jersey Red Duroc pork. If as an industry we are going to grow pork demand we need to deliver a better eating experience. When is it bad business to have a better product?
Link to Jersey Red Duroc – Pork Chop video:
https://www.tiktok.com/@jerseyredduroc/video/7167425843990416646?_r=1&_t=8XStHoW6h8Q&is_from_webapp=v1&item_id=7167425843990416646