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Farm Progress America, May 22, 2019

Max Armstrong continues offering insight from his recent conversation with Secretary of Agriculture Sonny Perdue. In the conversation, Perdue shared that farmers often find themselves at the “point of the spear” for trade; and he’s been the point man carrying news from the Administration. Max offers insight on the requirement of cabinet offers to be team players. Max asked the Secretary of farmers were losing faith in the Administration.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: feelpic/iStock/Getty Images Plus

Finding a feed mitigant that stands up to ASF

Alltech NHF-Alltech-ONE19-JonDeJong-Pipestone.jpg

Before porcine epidemic diarrhea virus hit North America in 2013 taking out 7 million pigs, Jon De Jong says no one in the swine industry would have considered feed to be part of a biosecurity program.

“When PEDV hit the North America herd, we immediately went to work on what we can do to stop viral transmission in feed,” says De Jong, president of Pipestone Nutrition.

While the root cause of the PED virus introduction to the United States has not been conclusively determined, the Pipestone team says contaminated feed and feed ingredients may have served as vehicles for introduction. The original PED virus strain detected in the United States shared 99.7% to 99.8% nucleotide identity with a Chinese PED virus strain and through a trans-Pacific transportation model created by Pipestone veterinarian Scott Dee and South Dakota State University, the team was able to show that the PED virus can survive the transport period in five key ingredients used to formulate porcine rations, including soybean meal (organic and conventional), vitamin D, lysine hydrochloride and choline chloride.

Fast forward six years down the road and the team has now expanded that “CSI approach,” working with Kansas State University to test 10 more viruses, one being African swine fever virus, and its ability to survive in feed. The team has shown that seven of the 11 animal viruses tested can survive the transglobal journey from either China or Europe to the United States in multiple feed ingredients. 

The Pipestone team has now placed their focus on finding a mitigant that can reduce the viral load in feed. This week during ONE: The Alltech Ideas Conference, De Jong along with Gordon Spronk, veterinarian and chair on the Pipestone Veterinary Services board of directors, announced that Alltech is acquiring a new mitigant technology called APC from Cornerstone (a joint venture between Pipestone and Ani-Tek to explore the technology). Through two isolation studies, three bioassay studies and one nursery performance trial, APC has shown efficacy in preventing the transmission of the PED virus as well as the porcine reproductive and respiratory syndrome virus and Senecavirus A in feed.

The next step is to see how the technology stands up to ASF.

“Pipestone is committed to the science to understand the risk of virus and how those viruses are transmitted to pigs and then at the same time dedicated to finding new technologies, which is where Alltech comes in,” De Jong says. “They acquired this new technology from us, and we are dedicated to providing solutions to the independent farmers we work with and trying to keep their herds as healthy as possible.”

Don’t trip on feed safety hurdles

iStock/Getty Images Plus/Terminator3D Illustration of hurdles of varied heights

The race to keep African swine fever out of the U.S. swine herd, is not a race that the industry, nor the entire U.S. economy, can afford to lose. Much has been written and said about the damage that ASF would do to the U.S. economy, literally shutting down export markets.

So, it is best that the entire swine industry gets limbered up for the race to keep ASF at bay. Early in May, the National Pork Board issued a press release on new research revising holding times of feed and feed ingredients to lessen the risk of ASF getting into the U.S. herd. The NPB is just one group that had a hand in this holding time revision, joining the National Pork Producers Council, the Swine Health Information Center and the American Association of Swine Veterinarians. SHIC and the Institute for Feed Education and Research, the public charity of the American Feed Industry Association, helped fund this research resulting in this updated information.

Paul Sundberg, SHIC executive director, says it’s going to take a concerted effort to help the industry win the race in keeping ASF far away from our pigs, adding that there is no silver bullet. “There is no one thing, that if you’re going to do this, you’re going to be completely safe,” he says, “so what we need to do is build a series of biosecurity protocols that you can think of them as a series of hurdles. And each hurdle might be a little different in height, and each might be a little different in efficacy, but when you put them all in a line, the first hurdle might take 75% of the risk away. The second hurdle might take another 10% of the risk away. The third hurdle might take another 40% of the risk away. Eventually what you do is you put enough hurdles in between the outside and the pig that you’re getting the risk down to zero or as close to zero as you can.”

Sundberg says the current issue with feed and feedstuffs is that there is no series of hurdles in place, such as holding time and mitigants.

“Let’s just say that if we import any of these feed ingredients and they have African swine fever in them and we don’t apply a holding time or an additive to the feed or any other mitigation that is just about a direct pipeline between that outside of the country and our pigs because we don’t have any of those biosecurity hurdles in there,” he says.

Sundberg acknowledged farms do have biosecurity measures in place to keep pigs healthy. “On a farm, you do shower in. That’s one thing. You change into farm-specific coveralls. That’s another thing. You don’t let people enter onto the farm through some back door. That’s a third thing,” he says. “All of those things are hurdles designed to keep pathogens away from our pigs. We’re trying to develop those hurdles for feed because otherwise if we don’t, we very well may have a back door wide open that those viruses can walk through and have direct contact with our pigs. So, we’re putting into place feed-specific hurdles or feed-specific mitigations to have biosecure feed supplies. And one of those things, one of those mitigations, one of those hurdles is a holding time.”

As in a hurdle race on the track, the runner does not jump over a single hurdle, he/she must successfully clear each of the hurdles to finish the race.

If Sundberg could have his wish list, No. 1 would be to source feed ingredients from an area that has low or no risk for foreign animal diseases, specifically ASF. “If I’m a U.S. producer, if I source it within the U.S., I know I’m not at risk for African swine fever. Period.

“Second thing, if I can’t do that, then I want it sourced from an area and let’s say it’s China or anywhere else. I want to know that it was clean when it was manufactured and it’s clean when I got it. And that is process control. That’s hazard analysis and risk control, and it’s blockchain.”

Third on his feed safety wish list is either adding a feed ingredient or a holding time. “If I can’t source it from a (ASF) free area or I can’t source it from a biosecure facility and know it’s going to be biosecure through the whole thing, then I want to do either a holding time on it or add a feed mitigant to it, add a feed additive that will help decrease it, or both.”

SHIC is just one of the many entities (National Pork Producers Council, National Pork Board, American Association of Swine Veterinarians) that have resources available for producers and feed suppliers to help win the race against ASF and any FAD. View the Feed Ingredient Safety decision tree on the SHIC website.

Just as there isn’t a lone hurdle in a race, there rarely is a lone runner. There is a full field of participants, and we all need to be as best prepared as possible so that we don’t stumble in this very important race for our industry.

’19 Pork Masters: Mastering the message the producer needs

National Hog Farmer/Kevin Schulz John Patience’s work at Iowa State University has benefited the North American swine industry by his close watch on the nutrition and management of the pig.
John Patience’s work at Iowa State University has benefited the North American swine industry by his close watch on the nutrition and management of the pig.

Early in his career, John Patience learned that understanding what producers want and need to hear is more important than telling them what you know.

Back in 1975, Patience was a young Extension swine specialist, and he was asked to give a talk to a group of hog producers in Saskatchewan. “I gave probably the worst presentation of my career. I completely misread the audience. I talked about stuff they had no interest in,” he recalls.

A pork producer had given Patience a ride to the meeting, and Patience recalls the ride home from the meeting “was one of the quietest rides I have ever been on. … It was bad, but I learned a valuable lesson.

“You’re not there to share your knowledge, you’re there to deliver information the producers need, value and can actually use. That was a very big — and essential — lesson for a young Extension worker to learn.”

Adhering to the lesson to give producers what they needed has earned Patience, Iowa State University professor of swine nutrition, the status of Master of the Pork Industry.

Helpful advice
A big reason that Patience pursued an Extension position after earning two degrees at the University of Guelph in Ontario, Canada, was an experience in his youth.

He was lured to work in Extension by recalling a visit by an Extension swine specialist paid to the farm of his parents — Alwyn and Ellen Patience — near London, Ontario, in the early to mid-1960s. That Extension swine specialist, the late Garnet Norrish, offered the elder Patience advice on a new cropping opportunity for his farm.

“He said, ‘Al, why don’t you switch to corn?’ They sat down at the kitchen table, and Garnie worked it out and said, ‘You can raise this number of pigs on this farm if you raise barley; but you can raise this number of pigs if you raise corn.’ So, the next year, my dad put most of the farm into corn.”

Before this, the Patience farm grew alfalfa and barley in addition to hogs. This was the time when corn was just beginning to achieve success as a crop in southern Ontario. It was a pretty novel idea.

The switch to all corn enabled the Patience farm to grow its hog production numbers. “That was a profound change in my father’s farm, so I saw what good Extension could do if you had a knowledgeable Extension person, and Garnie was a good guy. He was a farmer’s guy.”

Norrish said what the elder Patience needed to hear — not necessarily what he, as an Extension specialist, knew.

Patience learned to give producers information they needed to hear in his own Extension career. But about three years after that presentation debacle, a friend called him about a possible job change, a move to the feed industry as head nutritionist at a Saskatoon, Saskatchewan, co-op.

“I liked what I was doing, really enjoying working with the pork producers, just really good people to work with,” he says. “They were like producers everywhere. If they like what you’re doing, they’ll tell you; and if they don’t like what you’re doing, they’ll tell you that, too! So, it was a perfect environment for me to work in.”

Patience’s friend came back with, “So, John, you like what you’re doing, but are you going to like doing that for the rest of your career?” Patience was stopped in his tracks. “No, that was not what I wanted to do for the rest of my career.”

He spent four years as a nutritionist for that co-op, where he got to do collaborative research with American cooperatives such as Land O’Lakes, AgWay and Southern States. That work opened a lot of opportunities for Patience, but it also opened his mind to the fact that if he wanted to get anywhere in the feed industry, he would need to get his doctoral degree.

“That work environment was constantly challenging me, and I felt like I was unable to rise to the challenge the way I wanted to because I didn’t have enough education,” he says. Seven years had passed since Patience was last in a college classroom, but he had two jobs under his belt in that time — experience that would serve him well.

Rubbing elbows with experts in the field at nutrition conferences enabled Patience to know where he wanted to obtain his Ph.D. “I had met Dick Austic [a professor at Cornell University], and whenever he talked science, there was a twinkle in his eye; he was just so enthusiastic about science and so enthusiastic about answering questions and learning new things, so I thought I’d love to do my Ph.D. with him.”

Austic’s field of expertise was in poultry nutrition, which Patience thought was perfect. “That fit. I thought if I got my master’s in swine, and then got my Ph.D. in poultry nutrition, then I’m in good shape for working in the feed industry — because back then, we weren’t as specialized as we are today. Then, you handled multiple species.”

A little luck
Patience claims he needed a little luck to get into the Cornell University doctoral nutrition program. “I was a little late applying, and the person in charge of the nutrition graduate program said they were full,” Patience recalls.

“Because of my background, because I had experience, and there was a strong connection between Cornell and Guelph at that time, and he asked me where I got my master’s, and I said ‘Guelph’ — so that helped me — and he said, ‘You know, no one’s going to notice one extra person.’ So, they let me in. I mean, talk about luck, my whole life has been full of luck — there’s no other way to describe it.”

Patience was wondering what exactly he had gotten himself into as he attended his first Cornell lecture. “When I sat down in my first lecture at Cornell, I was kind of nervous. I look around and see that I’m by far the oldest one in class and I think, ‘Man, this might not be good.’ ”

It worked out just fine, as Patience, though the elder in the classroom, brought with him the industry experience. “When you have experience going into grad school, it really allows you to look at the material through a different lens,” he says.

“When the professors are talking about biochemical pathways or physiological phenomenon, your mind is going, ‘Oh, this is what happens in the pig; this is what’s going on when the pig isn’t eating, or this is what happens when the pig is sick.’ So that part of it saved me. The other students — their minds already had had that continuous flow of information, but they didn’t have the benefit of work experience.”

Though Patience came to Cornell with the idea of broadening his nutritional knowledge by adding poultry to his arsenal, Austic approached Patience saying he had the perfect dissertation project for Patience — it was in pig nutrition. “I told him, ‘I came here to study poultry, Dick.’ But I guess I was destined to work with pigs, so that’s what I did.”

Another bit of luck that graced Patience while at Cornell was that he was able to work with Dean Boyd, who was a Cornell assistant professor in swine nutrition at that time. “That’s when Dean and I forged a professional relationship, but also a friendship. … He certainly had a huge positive influence on me.”

What are you interested in?
Patience eyes retirement — with 2020 being his last year at Iowa State University — but as he looks ahead, he pauses to look back on his days at Cornell, and the tutelage he gained from Fred Hutt, a geneticist and professor emeritus.

“As I look to my retirement, I start thinking, ‘What am I going to do?’ They told me that when Fred was a full professor, he was very tough — very, very tough,” Patience says. “He was brilliant and successful, and he took me under his wing because I was Canadian, and he was from Canada. Fred would give me all kinds of advice.

“How do you achieve success professionally in this world? One of the pieces of advice he gave me was, ‘If you want to work with the industry, listen to the industry.’ I have followed that advice my entire career.”

He offers his own students a variant of that advice: “If you ask producers what they want, and you do it, don’t be surprised if they are interested in what you do. If you don’t ask producers what they’re interested in, and if you do what you’re interested in, don’t be surprised if they’re not interested in what you do.”

That advice harkens back to Patience’s own discovery from that failed presentation at the Extension producer meeting: Tell producers what they want and need to know.

Upon completing his doctorate, Patience spent two years at an Ottawa research station with Agriculture Canada, the Canadian version of the USDA. After his two-year stint there ended, there were virtually no nutritionist job openings open.

But then a phone call out of the blue came, asking if Patience would like to apply to become the director of the Prairie Swine Centre, a swine research facility at the University of Saskatchewan. He applied for, and got, the job. Once again, luck smiled upon John Patience.

After 21 years at the PSC, Patience felt he had done all he was capable of doing. “So, I retired, giving the board a year to find my replacement,” he says.

Next opportunity
After announcing his retirement from the PSC, and mulling over his next step, Patience ran into Chuck Rhodes, who was the dean of veterinary medicine at the University of Saskatchewan and an Iowa State University graduate.

“He asked what I’m going to do now that I’m retiring,” Patience says. Patience didn’t really have a plan, but Rhodes told him that Iowa State University was looking for a professor in swine nutrition. “Would you be interested?” Rhodes asked Patience. “Holy crap, yeah, I would be,” Patience recalls telling Rhodes.

Only problem was, he only had two days to turn in his application, which he did — “and the rest is history. … It was a phenomenal event in my life. Once again, serendipity if there ever was one. … If you can’t be successful in swine nutrition at Iowa State, where can you be?”

On the road to Iowa
When Patience made the move south about 10½ years ago, he was part of a rebuilding initiative at ISU. Both he and Nick Gabler, now a successful associate professor of animal science, joined the Animal Science Department at about the same time.

Patience’s ISU appointment is Research and Extension; and without the administrative responsibilities that he had at the PSC, he has been able to focus on research and work with a full complement of grad students. “It was just like a rebirth,” he says. “We’re a large department here, and a large campus focused on agriculture and swine, so the opportunities to collaborate are phenomenal: more than I had encountered before, so I’m able to expose my grad students to so much more diverse science than I could give them on my own.”

Not only can Patience expose his graduate students to other animal science professors and students, but ISU also offers chances for greater collaboration.

“Depending on their project, they may work with a microbiologist, or they may collaborate with the USDA facility [National Animal Disease Center] over on 13th [Street in Ames] and learn about immunology, or work with the faculty over in the vet school — all providing expertise that is well beyond my capabilities,” he says.

“My biggest emphasis is in trying to serve the industry and provide value to the industry; a very high priority for me is my students, because there’s such a shortage of people with advanced degrees in swine nutrition in this country. It’s a really serious shortage, and it affects our industry. … We have a great group of swine nutritionists out there, but whenever there’s an opening, my phone is ringing; and when my students get ready for graduation, they virtually never search for a job because people are always looking. It’s definitely a seller’s market, if you are a graduate student looking for a job.”

According to Patience, part of the reason for the shortage of swine nutritionists is because of the way the swine industry has evolved.

“The industry has become so technical. Years ago, high school education was enough for someone in certain sectors of the industry; and then years later, you needed a university degree, and then you needed a master’s and then a Ph.D. degree,” he says. “Larger companies started hiring their own nutritionists, who generally had a Ph.D. So, if I’m going to sell product to that company, or provide them with a valuable service, then I need a Ph.D. to be able to sell to their Ph.D., so it just hugely increased the demand for people with advanced degrees.”

Adding to the conundrum, Patience says, was that this evolution coincided with the decline in the number of university programs that were training swine nutritionists.

Patience says one industry strength is the variety of swine nutrition graduate programs in the U.S. They offer the industry great value, as well as offering prospective graduate students the opportunity to pick the type of program they would like to study in, choosing which professors or strength best fits them.

National Hog Farmer/Kevin Schulz research and his graduate students. He greatly values the graduate students he has worked with over the years, such as Amy Petry, a second-year d

research and his graduate students. He greatly values the graduate students he has worked with over the years, such as Amy Petry, a second-year doctoral student.

Well-rounded research
When Patience arrived at ISU, he had to first develop his research program — but he also had to develop his graduate program.

He harkened back to his training at Guelph and Cornell, and decided he wanted his students to be well-rounded in applied nutrition, and be exposed to the such basic sciences as biochemistry, physiology, immunology and microbiology.

Patience points out that across the country, there are many very good graduate programs in swine nutrition; some are similar to others, and some are different. He considers this an ideal situation, because “each one brings something different to serving our industry and gives undergrads the opportunity to select a graduate program that most closely suits their interests.”

Realizing that the seven to nine graduate students that he works with are individuals, and that each one is different, he treats each one differently. He admits that he is tough on his students, expecting a lot, but also knowing that each student has different strengths. “I tell them that I want them to write the best thesis they are capable of. I want them to be able to look back on their thesis in five to 10 years, and say, ‘Yeah, I did the best that I could at that time.’ I don’t want them to ‘just finish.’ ”

In addition to helping his students develop strong research and nutrition knowledge, he also stresses the importance of his students developing soft skills and gaining knowledge of the industry. Patience and his students frequently invite industry people to come to campus and talk about their company and the industry, and offer advice to people who are about to enter the working world. Patience says, “People in our industry are so supportive of students. They want to help them in any way that they can, and as a result, their advice is always very useful.”

Patience says upon retirement, he’ll miss his grad students the most. “They are what makes my job so enjoyable and rewarding,” he says.

Working together
Collaboration among universities is also an important part of research and of graduate training. Patience’s team has worked with teams at Kansas State University, the University of Illinois, Purdue University, the University of Kentucky, USDA, the University of Saskatchewan, the University of Manitoba, South Dakota State University, INRA (the French National Institute for Agricultural Research), Guelph and others.

“Our world is actually quite small, and working together makes us all better at what we do. Adding to this are the opportunities to collaborate with industry partners creates an impressive array of facilities, expertise and capability that no single institution could possibly support on its own,” he says.

“At times there is duplication in research done at different universities, and some people may think that’s a waste of time and money,” he says, “but I would rather have two research projects that come up with the same results than a single project with a P value of 0.001 any day of the week.” Repetition breeds validation and confidence.

Whether he’s talking of his own work at ISU, or that of another North American university, Patience sees such teams filling a role that production companies can’t provide the swine industry on their own.

Like everything else, the world of research is changing rapidly; many companies now own and run their own research facilities, and there is a growing list of private facilities available for contract research. Universities are asking themselves where they will fit a decade or two from now.

“We [universities] have the ability to do research projects that some of these companies cannot do on their own, so I think that we can play a role as a third-party researcher or collaborator with the industry,” he says.

“We can show our results and then they can take that work and try to apply it to their company. … We can also play a role in developing new concepts, or helping a concept evolve, or taking basic research and taking it to a more applied level; and then those production companies take that new knowledge and see if it really works in their system.”

As a university professor, Patience equates himself to a small businessman, with a product to sell, — or as he sees it, two products to sell. “I’ve got my research results, and I’ve got my students,” he says.

Now that he’s eyeing retirement in 2020, he no longer accepts new graduate students, so his remaining students will complete their programs before Patience heads out the door. He and wife Reb plan to travel over the next few years, as well as spend time with his grown children in Toronto — Emily, Mathew and Michael; and her grown children in Iowa — Kate, Nick and George.

Though he has a condominium in Toronto and plans to spend some time there, Patience is proud of the fact that he became a U.S. citizen in early March. “This country has provided me a lot, a second career, really — and a wife — so why wouldn’t I want to become a citizen?”

Research evolution
Just as the swine industry has evolved, so has Patience’s research work. It has varied enough over the years that it’s probably easiest to encapsulate his work as research to improve the health of the pig nutritionally. Over the years he has done work on water quality, feed efficiency, amino acids, and fat and fiber content in swine feeds.

“Research that we’re doing right now is looking at energy,” he says. “We got into energy because 10 years ago, very few were studying energy metabolism. What’s the most effective way to supply it to the pig, and then how does the pig use that energy?” This is important because energy is by far the most expensive component of the diet.

Energy research is complicated by there being four potential energy sources in a pig’s diet: fat, starch, protein, fiber. “How the pig responds to that energy depends on which source you feed the pig,” he says. “Our understanding of starch is pretty good, our understanding of amino acids is pretty good, but we don’t understand fiber at all very well in North America. The Europeans are way ahead of us. … So, we decided to concentrate on fat and fiber.”

Keeping research relevant to industry needs surfaced during the fiber research when the updated veterinary feed directive went into effect, banning the use of antibiotics as growth promotants.

“We can’t use drugs to prevent disease anymore, so we’re saying we know fiber has functional qualities,” he says. “We know it affects the health and function of the gut of the pig, it affects the structure of the intestinal tract — so let’s try to understand that, and let’s see if we can work to formulating diets to help the pig fight off disease without having to use antibiotics. … We can’t say we’re going to replace antibiotics or what antibiotics did, but maybe we can help the pig handle disease on its own more effectively.”

His only regret about the timing of his retirement is that he won’t be able to take this research to the next logical level, “to formulate some diets, and put them out there under commercial conditions to see what the pigs in the barns tell us. That would be my next step, but someone else will have to do that.”

The work of a Master is never truly done.

MIDDAY Midwest Digest, May 21, 2019

The Lucas Oil Speedway took a hit from the storms, as the new roof is now gone.

Max reminds listeners to be sure to take shelter when storm sirens go off, and don't go out for a photo.

Planting progress in North Dakota and Wisconsin is ahead of Illinois. 

Two-thirds of the wheat crop is in good/excellent condition.

Do you wince when your tax bill comes in? Some states in the heartland have the highest property taxes.

MORNING Midwest Digest, May 21, 2019

Eighteen tornados swept through five states yesterday.

Ohio farmers have a lot of work ahead of them. Only 9 percent of the corn crop has been planted there. 

Al Unser, Jr., has a history of speeding and alcohol challenges, and was arrested recently.

The Stanley Cup is coming up, and the St. Louis Blues are hoping to get there.

Are there rattle snakes in Nashville? Yes. A woman nearly stepped on one in a park.

 

Photo: deepspacedave/Getty Images

Farm Progress America, May 21, 2019

Max Armstrong offers more information from his recent conversation with Secretary of Agriculture Sonny Perdue including good news on the trade front. The news: Japan is reopening its market to U.S. beef after closing its market 16 years ago. Perdue shared that good news with Max and offers insight that the Japanese “love” U.S. beef.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: TanyaSid/iStock/Getty Images Plus

Mexico, Canada lift tariffs on U.S. red meat

wissanu01/iStock/Thinkstock. bring imports exports port container ship FDS

Both Canada and Mexico announced today the removal of tariffs on U.S. red meat. The Mexican government published the official notice removing Mexico’s retaliatory duties on U.S. pork, and Canada’s Department of Finance announced that Canada will immediately eliminate the 10% tariff Canada imposed on prepared beef items imported from the U.S.

“Restoring duty-free access to the Mexican and Canadian markets is a tremendous breakthrough for the U.S. red meat industry,” U.S. Meat Export Federation president and chief executive officer Dan Halstrom said. “USMEF thanks President [Donald] Trump and [U.S. Trade Representative] Ambassador Robert Lighthizer for reaching an agreement with Mexico and Canada on steel and aluminum tariffs and, in turn, Mexico and Canada’s lifting of the retaliatory duties on U.S. red meat.”

The latest actions also remove a significant obstacle for the U.S.-Mexico-Canada Agreement (USMCA), and USMEF is hopeful that all three countries will ratify USMCA as soon as possible, Halstrom said.

The National Milk Producers Federation (NMPF) also celebrated Mexico’s lifting of retaliatory tariffs against U.S. cheese exports. Still, NMPF said hard work remains for lawmakers and officials to further improve the trade outlook for dairy farmers.

“Dairy farmers have much to celebrate, with the resumption of normal business with our largest export partner,” NMPF president and CEO Jim Mulhern said. “To move forward in boosting exports, Congress needs to pass the USMCA, and Administration officials need to resolve the latest impasse in U.S. negotiations with China in a way that’s favorable to producers. Meanwhile, trade negotiations with Japan and other key partners also must move ahead. The time for progress on all fronts is now.”

Bill Morneau, Canada's minister of finance, stated, "With these developments, Canadian and American businesses can now get back to what they do best: working together constructively and supporting good, well-paying, middle-class jobs on both sides of the border. The removal of tariffs and countermeasures is a true win-win for everyone involved and great news for Canadian and American workers, for our communities and our economies."

Is the hog market overly optimistic?

Pork export illustration

USDA is forecasting record U.S. pork production and a domestic per capita supply that is the highest since 1981. They are also forecasting the highest hog prices since 2014. That is not a likely combination. None the less, the futures market is more optimistic than USDA.

Calculations by Lee Schulz at Iowa State University indicate a typical Iowa farrow-to-finish operation earned $38.81 for each hog marketed in April. That makes April the most profitable month since July 2017 and only the second profitable month since last July. Schulz estimates cost of production for hogs marketed during April at $45.78 per hundredweight of live weight. Cost of production has been between $45 per hundredweight and $46 per hundredweight for each of the last nine months.

Chart: Iowa market hog profit Farrow/Finish, monthly

U.S. pork production is expected to be record high in 2020 for the sixth consecutive year. Yet, hog prices are forecast to remain profitable this year and next. Record production and profitable prices will require strong demand.

The average live weight price for 51-52% lean hogs in 2018 was $45.93 per hundredweight, down $4.55 per hundredweight from a year earlier. USDA is forecasting an average live weight price for barrows and gilts this year of $54.50 per hundredweight which will be the highest since the record year of 2014. USDA is predicting live hog prices in 2020 will average $60 per hundredweight.

The futures market is even more optimistic. The lean hog futures contracts imply carcass hog prices will average near $88.50 per hundredweight (roughly $64.75 per hundredweight live) for the rest of this year and around $85 per hundredweight ($62 per hundredweight live) in 2020.

Chart: Barrow and gilt prices (Iowa-southern Minnesota, carcass base price, weekly)

USDA’s April World Agricultural Supply and Demand Estimates forecast put 2019 pork production at 3.8% more than last year with 2020 production up another 3.5%. With population growth under 1%, demand must remain strong to support expected hog prices.

U.S. pork exports were record high the last two years and are expected to increase even more this year and next. USDA has upped 2019 pork exports to 6.4% more than last year with 2020 U.S. exports up 6.9% from this year.

Last year, U.S. exports of pork muscle meat equaled 22.3% of production. That was down from the record of 23.2% exported in 2012. USDA is forecasting a similar level for this year — exports at 22.8% of production. Their latest projection has U.S. pork exports at 23.6% of production in 2020, a new record.

The growth in exports is not enough to stop the domestic supply from increasing. The U.S. per capita pork supply last year was 50.9 pounds per person. This year it is expected to be 52.1 pounds per person. In 2020, 52.9 pounds per person is expected. That will be the largest supply per American since 1981. It is hard to confidently predict high hog prices when per capita supply is increasing.

Feed prices have been low for the last several years. The first WASDE forecasts for the 2019-20 crop marketing year came out earlier this month. USDA is predicting more corn acres than last year and a 15-billion-bushel corn harvest for only the second time ever. This caused them to forecast the average price of a bushel of corn at $3.30, down 20 cents from last year. The soybean harvest is projected to be nearly 400 million bushels smaller than last year. Despite a smaller bean crop, USDA’s initial forecast has soybean prices at $8.10 per bushel, 45 cents per bushel lower than for last year’s crop.

Chart: Omaha corn prices (Weekly)

USDA’s production forecasts for corn and soybean are beginning to look optimistic. Because of wet weather this spring, acres planted to corn and soybeans have been lagging well back of the average planting rates.

The average retail price of pork in grocery stores during April was $3.787 per pound, down 1.2 cents from the month before, but up 3.5 cents from a year ago. Both packer margins and retailer margins shrunk from the month before.

Hog prices and pork cutout value each increased in April. The live price of 51-52% lean hogs averaged $57.68 per hundredweight in April, up $15.22 from March, up $17.80 from last April, and the highest monthly average hog price since August 2017.

The pork cutout value during April averaged $84.69 per hundredweight, up $13.29 per hundredweight from March, up $16.59 per hundredweight from a year earlier, and the highest month since August 2017.

Chart: Pork cutout value (Voluntary data prior to 2013), weekly

The expectation of record pork exports has been the driving force behind the runup in hog prices this spring. African swine fever in China has dramatically reduced Chinese pork production causing the market to expect very strong U.S. pork exports. But, that has yet to show up in the monthly trade data. U.S. pork exports during the first quarter were down 70 million pounds (4.6%). Most of the decline was due to a 69.5 million pounds drop in shipments to Mexico. Pork exports to South Korea and Japan were also sharply lower. Despite ASF, China purchased 18 million pounds less U.S. pork and Hong Kong purchased 14 million pounds less U.S. pork than in the first quarter of 2018.

The weekly data on exports of fresh, chilled or frozen pork muscle cuts show much larger shipments to China during April and early May.

U.S. pork imports during January-March was down 7.2% due to a big drop in imports from Canada. Australia, Colombia, Chile, Canada and Taiwan each bought at least 10 million pounds more U.S. pork in the first quarter than they did last year.

Recent hog slaughter has been higher than indicated by the March Hogs and Pigs Report. Since the first of March, federally inspected hog slaughter has been up 2.3%. This compares to an increase of 1.7% implied by the March market hog inventory. Hog slaughter during June-August should be up 2.4% year-over-year if the March hog inventory numbers were correct.

Chart: Hog slaughter (Federally inspected, weekly)

Slaughter weights in 2019 have been slightly higher than a year ago, pushing up pork production. Thus far in 2019, hog slaughter has been up 2.2%, but pork production is up 2.4%.

Chart: Barrow and gilt dressed weight (Federally inspected, weekly)

This afternoon USDA will release their weekly crop progress report. The monthly Cold Storage report comes out on Wednesday afternoon. The Livestock Slaughter report for April will be released Thursday. Preliminary data indicate April hog slaughter was up 6% year-over-year, with one more slaughter day this April than last. Daily hog slaughter appears to have been up a fraction over 1% in April, which is a bit less than implied by the March Hogs and Pigs report. USDA will release the April Cattle on Feed report on Friday afternoon.

Source: Ron Plain, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.