National Hog Farmer is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Sitemap


Articles from 2008 In June


Hogs & Pigs Report 'Disheartening'

The opening line of National Hog Farmer’s March 2008 USDA Hogs and Pigs Report Review read: “If U.S. and Canadian hog producers needed any more cold water to shock them into full scale contraction, Friday’s Quarterly Hogs and Pigs Report from USDA ought to do it.”

Ditto that statement, today, as it applies to Friday’s June Hogs and Pigs Report, as well. The report may not be devastating, but it is certainly disappointing. Table 1 contains the key numbers from the report and they are undoubtedly bearish, with all but one larger than the average of the pre-report estimates and all near the top of the range of those estimates.

The most important aspect of the report is the continuation of huge slaughter numbers through 2008, before some reductions occur next spring. The market herd was estimated to still be 6.5% larger than one year ago, with the bulk of that increase being in the higher-weight categories.

The 180-lb.-plus category was pegged at 10.2% larger, 2.5% higher than the pre-report estimates. That difference would at once make one a bit suspicious of the report, especially when one compares the 10.2% increase to actual June slaughter that is up just less that 7%. The trouble is that you must adjust for the fact that last June had 21 weekdays and five Saturdays, while this June, to date, has had just 20 weekdays and four Saturdays. Additionally, it appears that about 90,000 to 95,000 fewer Canadian market hogs have come to the United States this June. After adjusting for those numbers, June slaughter is about 9.1% larger than last year and, while still a bit large, that 1.1% discrepancy between adjusted June slaughter and the 180-lb.-plus inventory doesn’t call the report into question, although the two heavyweight classes would indicate that there are plenty of hogs coming.

The lighter categories are a bit less burdensome, but still imply large slaughter runs in late summer. Further, the March-May pig crop, at +4%, is one of the very disheartening numbers regarding fall supplies and the prospects for better hog prices. The trade had expected about half that amount of pigs this spring due to smaller expected growth for both farrowings and litter size. Both of those came in at +2%, indicating that renewed productivity growth is still occurring. Further, the pace of that growth is apparently increasing.

The 2% growth in litter size is the largest since 1997, when litter size growth was mainly the result of rapidly changing industry structure and improving productivity when we were trading low-productivity farms for high-productivity farms. This year’s increase may be built on a bit of that as the sow herd declines, but most of the increase is attributable to growth in litter size on existing farms. The same goes for farrowings. Both factors are at least partially due to the use of circovirus vaccines.

The larger market inventories and lower imports of Canadian market hogs suggest that Q3 slaughter will be 7-8% larger and Q4 slaughter will be 3-4% larger than in 2007. Those slaughter levels will result in national net negotiated carcass-weight prices in the low to mid-$60s in Q3 and mid-$50s in Q4. Those forecasts use an elasticity of demand of -0.50, which is more favorable to hog prices than the one used last year (-0.33). Price-quantity relationships this year indicate that hog demand is more elastic.

Farrowing Cutback Coming
Producers’ farrowing intentions indicate that cutbacks are in store. June-August farrowings are expected to be 2% lower, while Sep-Nov farrowings are expected to be 4% lower. In addition, imports of Canadian feeder pigs are falling as the Canadian breeding herd and pig crop are reduced. I believe these reductions will result in lower U.S. slaughter beginning in Q1-2009. My calculations show Q1-09 slaughter about 1.5% lower than that of Q1-08 and Q2 slaughter 4% lower. Those reductions should put national negotiated net carcass prices in the upper $50s in Q1 and near $80 in Q2.

Points to Remember
Keep in mind these two key points:

  1. None of these prices are even close to profitable! My projections for breakevens are well above $90 next summer. Losses this fall could be huge and these numbers don’t help that situation at all.

  2. My price forecasts – and those of Iowa State University Economist John Lawrence (the only other one posted as I write this) are not nearly as high as are the Chicago Mercantile Exchange (CME) group Lean Hogs Futures. While none of the futures contracts on the board offers profits at today’s cash corn and corn futures prices, they do offer smaller losses than I believe producers are going to see in cash markets through mid-2009.
That opinion is not unanimous. There are some analysts that believe cash hog prices will be much stronger than I predict, mainly on the strength of export demand. Pork production is shrinking virtually worldwide in the face of high feed costs and export demand may indeed improve our situation. I hope they are correct, but as you can see above, I still believe cash hog prices will be far from profitable until at least the summer of 2010.




Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com

Funds Available to Areas Devastated by Disasters

The U.S. Department of Agriculture is urging producers affected by floods or tornadoes in several states in the Midwest to immediately apply for aid in presidentially declared disaster areas.

“USDA is encouraging residents and business owners to immediately apply for funding to help them to begin their recovery from these devastating storms,” says Thomas Dorr, Agriculture Department under secretary for Rural Development. “Rural Development has a number of programs that can be used by citizens to help them get back on their feet. These programs can literally assist in building a community from the ground up and we stand ready to help our fellow citizens in the affected states rebuild their communities and their lives.”

USDA Rural Development has grant and loan funds available to rural communities for housing and shelter, public safety, health care and community facilities and business recovery assistance.

For further information on rural programs, contact your local USDA Rural Development office or visit USDA’s Web site.

Indiana Urges Flood Victims to Apply for Help

“Three weeks after flooding devastated many Hoosier farms, time is running out on a number of the benefits available to help,” reports Indiana Agriculture Director Andy Miller.

“Farmers need to respond quickly to apply for disaster assistance from many federal agencies, including the Federal Emergency Management Agency (FEMA), the U.S. Department of Agriculture’s Emergency Conservation Program and federal Disaster Unemployment Assistance.

“I urge every farmer who has been affected by the flood to spend time reviewing the Indiana Disaster Assistance for Agriculture checklist found on the disaster Web site (www.emergency.in.gov/agriculture) and all the other information we have collected and make sure they have taken advantage of every program available to them. This was an unprecedented flooding event in many areas, and we need to use all the resources available to us to recover the land and our agricultural infrastructure for future seasons.

“USDA and other state and federal agencies have reacted in unprecedented ways to expedite assistance for Indiana farmers. I applaud their quick action and farmers need to take advantage of these opportunities now or they will miss the assistance completely,” Miller urges.

Ohio Holds Economic Outlook Session July 17

Steve Meyer, president of Paragon Economics, will address The Ohio Pork Producers Council (OPPC) on surviving the economic downturn in the pork industry at a meeting set for July 17 at Cherry Valley Lodge in Newark, OH. A luncheon will be held following Meyer’s presentation.

Topics of discussion will include:

  • Profitability outlook for U.S. hog producers;
  • How will the U.S. hog sector adjust to $8 corn?
  • How will U.S. grain users ration a short corn crop?
  • What’s ahead for hog prices?
  • How can I remain a profitable pork producer?

Meyer’s talk is open to the first 75 pork producers who register. For more information, please call the OPPC office at (800) 320-7991.

Find more swine management events in your area
Subscribe to our weekly newsletter to read more articles from Steve Meyer!

Kansas Offers Mediation Services

Pork and beef producers struggling with soaring input costs have mediation services available through the Kansas Agricultural Mediation Service (KAMS), according to KAMS mediation coordinator Char Henton.

KAMS is part of Kansas State University’s Research and Extension, working with farm and ranch families confidentially to connect families with services and to help resolve disputes with government agencies, banks, suppliers and others.

KAMS identifies options for producers, and provides key services such as financial counseling through the Farm Analyst Program and legal counseling through Kansas Legal Services, says KAMS staff attorney Forrest Buhler.

Services are either free or fees charged are much below the industry average, he says.

“Our industry is in somewhat of an unusual situation,” says Tim Stroda, president and chief executive officer of the Kansas Pork Association. “For three to four years we had a record run of profitability. Then, in October last year, everything turned upside down.”

Since then, Kansas pork producers were losing as much as $60-70/hog sold, until the market situation improved this spring, helped by strong demand for pork from overseas buyers. Even so, producers are still losing $20-25/head, he says.

Kansas is the ninth-largest pork-producing state and its hog operations consume more than 30 million bushels of grain annually. Based on current feed costs, producers will spend more than $165 million on corn and grain sorghum in 2008.

For more information on KAMS, call (800) 321-3276 or log onto http://www.oznet.ksu.edu/kams/.

USDA Announces Five Pork Board Appointments

The U.S. Department of Agriculture has appointed five pork producers to the 15-member National Pork Board. The five were selected from eight pork producers nominated by the National Pork Board Delegate Body during its March meeting in St. Louis, MO.

The newly appointed board members include Conley Nelson, Algona, IA; and Karen Richter, Montgomery, MN. The reappointed board members are Roy Henry, Longford, KS; Alan Wilhoite, Lebanon, IN; and Brian Zimmerman, Beatrice, NE.

The appointees will serve three-year terms.

The Pork Board was established by the Pork Promotion, Research and Consumer Act of 1985, through which the board develops budgets and awards contracts to implement a coordinated program to strengthen pork’s place in the marketplace.

The mandatory pork checkoff program is funded by an assessment of 0.40% of the market value of all hogs sold in the United States, and a similar amount assessed on imported, hogs, pork and products.

USDA’s Agricultural Marketing Service oversees the operation of the board.

Kansas Plans Ag Risk And Profit Conference

The Kansas State University (KSU) Risk and Profit Conference is planned for Aug. 14-15 at the KSU Alumni Center in Manhattan, KS.

Kansas City Federal Reserve Bank Senior Economist Jason Henderson will open the noon program Aug. 14 with the federal view of the economy. KSU agricultural economist Troy Dumler will discuss the new farm bill and how it will affect Kansas farmers.

The conference will also feature a livestock and grain outlook session with KSU livestock and marketing economists James Mintert and Mike Woolverton at the Aug. 15 breakfast.

Participants will be able to choose up to eight from a total of 19 breakout sessions during the conference including discussion of global supply and demand, feeding the world, evaluating traditional risk management tools, the future of raising livestock, managing corn prices, credit scores, climate changes and more.

Learn more about the program on the Web: http://www.agmanager.info or by contacting Rich Llewelyn at (785) 532-1504 or rvl@ksu.edu.

Find more upcoming swine management events in your area

Michigan Detects PRV In Four Game Farms

The Michigan Department of Agriculture (MDA) has detected four “transitional” swine herds which have tested positive for pseudorabies (PRV). The herds were identified on farms in Saginaw, Gladwin and Cheboygan counties.

The MDA and USDA’s Veterinary Services continue to conduct circle testing and trace animals from PRV-associated facilities; 130 herds have tested negative and 21 herds are awaiting testing.

Currently, 34 facilities with “transitional shooting swine” are quarantined for routine testing. These game ranches may continue to shoot swine on their sites, but must have a veterinarian collect and submit blood from the swine for testing.

Also, game ranch owners have notified five swine suppliers that they must supply test-negative swine. Three suppliers have contacted MDA and requested testing. All five breeding operations have been quarantined and suppliers have been advised to only sell PRV test-negative swine.

USDA Wildlife Services is responsible for depopulation of PRV-positive transitional swine. So far, one facility in Gladwin County has been completely depopulated.

More health news

Pork Board Issues New Safety Database

The pork checkoff’s new Safety Reporting Database can help employees go home whole and healthy each day.

“The Safety Reporting Database provides a unique opportunity to share safety precaution suggestions with fellow pork producers while maintaining the confidentiality of your own business practices,” says Ann Beacom, an associate consultant with the Organizational Effectiveness Research Group at Minnesota State University, which is assisting with the project. “The whole industry can benefit by promoting farm safety and communication between safety professionals.”

The database is free to use. It will debut this summer at www.safetydata.pork.org. The idea for the database surfaced from the pork checkoff’s annual Worker Safety Roundtable, where producers, safety professionals and other participants learn about potential hazards and focus on improving the pork industry’s safety record.

“These folks were facing many of the same safety issues, and they agreed it would be useful to have a way to discuss the types of accidents that were occurring and how these issues were being addressed,” Beacom says.

Producer Tells Family’s Story on YouTube

Missouri pork producer Chris Chinn is opening her family’s farrow-to-finish hog operation to the world by inviting guests to take a visual tour through the power of YouTube.

“In today’s world, putting a face on farming is necessary,” says Chinn, a fifth-generation farmer who runs a 2,400-sow operation near Clarence, MO, with her husband, Kevin, his parents and his brother. “It’s important to use online tools like blogs and social networking sites to reach a wider audience and stand up for agriculture.”

The five-minute “Truth about Modern Pork Production” video depicts daily life inside the farrowing room and finishing barns. Chris narrates the video and describes the farm’s nutrient management plan, the barns’ computerized climate control systems and explains the importance of animal well being, from proper nutrition to veterinary care.

“We hope this helps people understand why we use modern technology on farms and the benefits it brings to our livestock,” says Chinn, whose husband shot the video with a camcorder. “Our motivation is to maintain our business and way of life so we can pass the farm on to our two children some day.”

The pork checkoff has recently released three new videos on YouTube to answer consumers’ questions about animal care, feeding, transport and more. The one-minute videos feature pork producers and industry experts fielding questions from consumers on animal care issues.

Videos on the checkoff’s YouTube channel includes “Pig Farmers Take Action” (which focuses on animal health and well-being); “Ride Along with a Pig” (transportation); and “Pigs Are Hungry, Too” (nutritional needs).