JIM LONG'S PORK COMMENTARY
GENESUS is a registered trademark of Keystone Pig Advnacement Inc.
February 04, 2008
Pork Commentary By Jim Long, President and CEO, Genesus Inc
Markets were stronger last week with Friday’s Iowa-Minnesota average 53.38, up from 46.63 three Fridays ago, or about $14.00 of really needed extra dollars per head. Weekly US slaughter was 2.276 million, down from the previous week’s 2.304 but up from a year ago 2.048 million head. If there is any silver lining in this huge slaughter increase year over year is the fact slaughter weights are dropping rapidly 2.2 lbs over the last two weeks. We would not be surprised that we take five pounds off slaughter weights in the next five weeks. A one pound a week average. We are pulling hogs ahead. As slaughter numbers come down in the next few weeks, lower weights will mean less pork tonnage. May Lean Hog Futures were 74.95 on Friday, which is about $40.00 a head better than we are now. With about 2.5 million market hogs in Canada and USA a week that’s $100 million dollars more for a production base. That would help a lot.
• Tyson Foods is planning to close their beef plant in Emporia, Kansas, laying off up to 2,400 workers. Good signal that there is concern that cattle numbers will be decreasing. Less beef tonnage is positive for pork. Pork is the other red meat (surely we are confused).
• Further signs of liquidation in Ontario. Here are some of the sizes of sow units quitting and this is not all of them. M 1500, C 1500, V 2500, P 1000, D 1500, R 750, T 3000, D 440, J 1500, R 1500, V 1200, R 750, F 4500, etc. In Canada you have not only feed and price challenges but the question of slaughter plant viability, exchange rate, country of origin, trade actions, basis etc. Many producers everywhere are asking, “Are we viable short term and long term?” As issues magnify, it can trigger liquidation.
• Rabobank (largest agriculture bank in the world) is reporting that up to 100 million pigs have died in China from Porcine High Fever Disease.
• Price of pork in China is $2.00 a lb. The government has instituted price controls on pork. Prices have quadrupled in the last year.
• The Chinese government has announced subsidies of $2.2 billion dollars to keep prices in check and a disease health insurance scheme to keep producers in business.
• China has banned the use of grain for ethanol production to help ensure food supplies.
• China instituted the use of Methanol fuel (from coal). There are now 200 plants producing 3.6 billion gallons per year by 2010, 6.6 billion gallons. China has the world’s third largest coal reserves. Methanol is being produced for 55¢ gallon.
• The United States has the world’s largest coal reserve. Just a thought – use coal for fuel. Use corn for food. Maybe the Chinese are ahead on this one. The idea of burning your food to drive your car is one that historians will write about. The judgment will be harsh.
• $2.00 lb pork in China should continue to drive US pork exports. As slaughter decreases seasonally this will continue to push price higher.
• At the Minnesota and Iowa trade shows, we talked to several AI studs and AI equipment suppliers. They reported rod usage and AI sales down from 2 to 20%. This would be a sign of less demand from a smaller sow herd. You do not breed what’s not there.
• Last week, more reports of large PRRS breaks knocking big holes in some production systems. We believe that the impact is significant with even a 1% decline in total supply price altering.
• A producer called us and named producers and their sow numbers who were quitting in his area. Near the Iowa-Minnesota border, it is interesting that this is happening in an area of packers, feed and opportunity for manure utilization. It was over 5,000 sows in a relatively small area.
Liquidation is happening. There are large PRRS breaks, exports are strong with still major opportunities in China. Last week, Korean contacts (Korea one million sows) told us that the feed price (all imported grains) there was panicking the industry. In Eastern Europe our contacts told us that liquidation was underway. Global pork supply, not only domestic pork is declining as we speak. We are confident there is upside of 5¢ plus to all lean hog future months from May on. It’s nasty now, but if you have ability and faith in yourself and our industry. Better times are coming.
Genesus is pleased to announce that Tony Moulds and Dennis Stevenson have joined our company.
Tony studied at Bishop Burton College in Britain, and then managed a nucleus unit for Newsham Hybrids, before moving to National Pig Development, where he worked in the export department for 11 years. In this role, Tony gained experience of pig production in North and South America, Africa, Asia and Europe.
He moved to Canada to manage National Pig Development (NPD) Canadian multiplication system. In 1997 established Partners in Genetics, a distributor of Genex (NPD) breeding stock.
Tony was instrumental in developing the concept of a co-ordinate group of independent producers, negotiating long term contracts and establishing Rocky Mountain Pork in 2000. In 2001 Tony and partners formed Danbred Canada. As president he was involved in the first importation of Danbred to Canada. Subsequently nucleuses, multiplication, marketing and sales were established. For a time Tony was responsible for Danbred sales and marketing in Canada and USA.
We are pleased Tony has joined our company, his experience, knowledge, industry contacts and entrepreneurial drive will enhance our sales team domestically and internationally.
Genesus is pleased to announce the appointment of Dennis Stevenson as Operations Manager.
Dennis is a graduate of University of Saskatchewan.Dennis previous experience includes:
Quadra Group 1996 – 2001 Unit Production Manager – Operation Technical coordinator and Production Trainer.
Enterprise Swine Systems (Dynamic Pork) 2001 – 2003 – Production Manager 3600 sows.
Sunnydale Farms Ltd. 2003 to present – Production Manager 3000 sows farrow to finish.
Dennis has extensive experience with Genesus managing the Sunnydale operation. Sunnydale’s Clearview unit achieved 28.30 weaned and the other Ashwood 25.60 on Genesus 25+ Award list. We look forward to Dennis bringing his people’s skills, production expertise, analytical ability and logistic knowledge to Genesus.
