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Articles from 2014 In August


Localized Soybean Meal Shortages Possible

Localized Soybean Meal Shortages Possible

Entering each soybean harvest brings great promise in yield expectations, and in certain pockets of the United States, that promise also brings some concern about the availability of soybean meal until the new crop beans come in to the system.

“We had heard the same kind of rumblings that places had stopped offering meal until they could buy the beans,” says Phyllis Nystrom, branch manager of the CHS Hedging branch in Inver Grove Heights, MN. “It’s that domino effect; if you can’t source the beans out, you can’t crush the meal. … shortages are probably localized at this point.”

Nystrom says, depending on what area you are, there are some old crop beans being held onto, “the old adage of ‘funeral beans,’ you’re going to have those until you die.”

A tight supply of beans, correlating into a tight soybean meal supply, should not be a surprise to anyone. “We’re going in with a tight carry into next year, and we knew that all along,” she says. A bright spot is the early harvest reports coming out of the Delta, “phenomenal yields from what we’ve heard, but that’s feeding the export market so the export market has backed off some, but it’s hitting the domestic interior where people need to deal with the crushers.”

Though she has heard the soybean meal shortage rumblings, “I can’t pinpoint where anyone has said they aren’t offered any more, but you hear the chatter. … Haven’t heard anyone having a hard time filling their contracts, but it’s those new sales” where problems may arise.

As understandable, soybean meal prices rose on the rumblings of shortages, but they have settled back in after the initial knee-jerk reactions. “September futures in delivery now are still very, very high. They’ve backed off, and then have come back in the past couple of days on the futures side,” she says.

What do hog producers do if they truly are faced with a soybean meal shortage?

Animal nutrition specialists recommend using the maximum amount of synthetic tryptophan in the grow-finish diet to reduce soybean meal up to 100 lb. per ton. Of course, it’s always best to review a change in your swine herd’s diet with your nutritionist.

Just Telling His Story

Just Telling His Story

If Larry Sailer had his way he’d stay home and raise pigs.

“But we need to have spokespeople out here,” he says. “Didn’t think it would be me, I’m just a shy old farm boy.”

This “shy old farm boy” also claims he isn’t a writer, and that he never has been a writer. In spite of that claim, it seems Sailer sure writes a lot in the name of agriculture advocacy. And, a lot of people are reading and listening.

Sailer, a pork producer from Iowa Falls, IA, got involved in advocacy because he says he didn’t like the way he saw things going in U.S. agriculture, more specifically the way government regulations seemed to be interfering with farmers doing their job.

“Biggest thing to me, the biggest reason I got involved is when we have all these anti-ag groups out there hammering all the time and being vocal, and getting all rallied up to make more government regulations,” he says. “More government regulations are just strangling business in this country, and I just don’t see we need it. Government doesn’t need to babysit everybody.”

A Farm Bureau Speaker Corp. meeting about six years ago was Sailer’s first step into telling his side of the story. “There was a young man at that meeting who said we should be using social media to tell agriculture’s story,” Sailer says. “Well, three or so of us started doing that, and it really seemed to take off.”

Facebook and Twitter had been his main avenues for spreading his words at that time, but then 2½ years ago he began a blog called, “Musings of a Pig Farmer.” Sailer is a Latham Hi-Tech Seed dealer, and his blog appears each Tuesday on the Latham Seed website at www.thefieldposition.com/category/industry-news/musings-of-a-pig-farmer. Sailer readily admits he isn’t a trained writer, but he has an editor in Shannon Latham who does have a journalism degree, and can polish his blogs to get them ready for “prime time.” Though his blog is called “Musings of a Pig Farmer,” he tackles a wide variety of rural-related topics. For example, his last few blogs have covered how he came about being a seed dealer, rainfall and soil conservation, and looking at the bias some groups have in their statements on various issues.

With Facebook and Twitter, Sailer has developed quite a network of people with whom he communicates. “I have a lot of people from all over the world who I communicate with, and not just agriculture, but I have politician friends and media friends,” says the man who boasts 2,000 Facebook friends and about 1,000 Twitter followers.

His activity in social media has gained him greater exposure in more traditional media, too. Sailer says Fox News did a Google search for “corn” and his name came up. “They sent a crew out and we were combining beans, so they got video in the combine — they didn’t even know what beans were,” he relates.

When Sailer blogs or posts on Facebook or Twitter, he is in control of his message. He has learned this isn’t always the case when the general media get involved. “This was during the last presidential election cycle, and I thought we were winding down the interview in the soybean field, and they [Fox News] started asking who I was going to vote for for president.” After they kept badgering him, Sailer finally gave in and admitted who would receive his vote. As it turned out, when the Fox News report was aired, “It was 5 seconds of me saying who I was going to vote for. It had nothing to do with ag. Their story was, ‘Here’s an Iowa corn farmer who’s going to vote Republican.’ So you never know what it’s going to boil down to,” he chuckles.

Sailer has been working with the National Pork Board’s Operation Main Street (OMS), where he says he has, “pretty much covered all the community groups within 50 miles of me. We’d usually talk to retired people in little bitty towns, maybe have 20 people show up.” OMS 2.0 is now reaching out to a broader audience.

Even though he enjoys speaking to groups of people through Farm Bureau or OMS, Sailer still prefers social media for its reach.

As a self-described pig farmer for the last 50 years, Sailer has worked in almost every facet of the industry. He has farrowed, finished, contract-fed and worked for a hog management company. During the 1990s, he owned a construction company that built and installed equipment in pig barns, when the big push was to get pigs inside. He raised pigs outside and inside barns. So when he blogs about raising pigs, he is speaking from experience about what will and, maybe more importantly, will not work.

Currently, he manages a 4,000-space site for a different owner. “I like to raise pigs, so I like to stay in it,” he says. Sailer’s background has helped him develop the experience and instincts it takes to raise pigs these days. “You just have to be meticulous,” he says. “Some people don’t pay attention to details like you need to; you need to look at every pig.” Sailer notes that it is much easier to raise many more hogs today than it was when he started on his own in 1972. “I bought seven sows from a neighbor, farrowed them and finished those pigs. Then I bought feeder pigs, bought 200 to 300 at a time. I was a ‘large producer’ at the time, but you spent all day taking care of those pigs, keeping them cool in the summer, and in winter bedding them down, moving snow, keeping water unfrozen, and fighting all kinds of diseases brought in by rodents and birds. …

“Today people think we just pack pigs into these new barns and they’re just filled with disease, but it’s just the opposite. They’re healthy, comfortable in an environmental-controlled barn with all the feed and water they want. We don’t have near the diseases we had back then; I use by far less medications than I did back then,” he says. He works hard to share this message with his non-farm audience.

Sailer says it is impressive that pig farmers are also doing more with less, at least when it comes to feed efficiency. He reflects, “We used to have to feed 5 lb. of feed to get 1 pound of pork, now it’s 2.41 lb. feed to 1 lb. pork. Yes, there are tighter margins, but you can do it so much more efficiently.”

When sharing the pork production story, those are the stories Sailer likes to tell — just why farmers do what they do. “Overall, I think the rational people, like when I give a speech to a civic group, I think they actually listened and learned. When do they actually get a chance to talk to a farmer? Studies have proven that we apparently have credibility,” he says. “In our organizations, we used to hire a guy in a suit to go out to do our publicity for us; that didn’t work. But if they [the audience] know you’re an actual farmer, that holds a little more merit. The way I write may not be real smooth, but that’s me. and that may give me credibility.”

He feels farmers speaking for themselves are making gains with the general populace.

“I talk about listening quite a bit, mainly because the anti-farming groups do not listen. They share the same listening points and just use the same points over and over again. It makes no sense to continue because they just will not listen. I try not to be close-minded. I try to listen.”

His Facebook, Twitter and blog comments are his opinions, which he is not afraid to share, and he admits he is not always politically correct. “I usually don’t get into arguments. I’ll state my case once or twice and then walk away,” he says. “Some people who want to argue, just want to argue.”

Argumentative or not, Sailer sees people reading his social media posts as a first step. He concludes, “If they’re reading, they’re at least thinking about it, and that’s starting a conversation.”

Is the EPA Really the Enemy of Agriculture?

Is the EPA Really the Enemy of Agriculture?

The U.S. Environmental Protection Agency (EPA) has been a main topic of discussion in agricultural circles this week as the debate over the proposed Waters of the U.S. Rule continues to rage. The Lincoln Journal Star newspaper website reports that Nebraska Gov. Dave Heineman went so far during a conference call with reporters as to call the EPA “the enemy of agriculture,” saying the agency has been turning to overly aggressive attempts at regulation.

The JournalStar.com website quotes Heineman, “The federal government, particularly under the Obama administration, has been overly aggressive with regulation. We all support clean air, clean water and appropriate regulations. But it is the EPA that is the enemy of agriculture.”

The JournalStar.com continues:

A series of proposals and disagreements in recent years – from proposed regulation of farm dust to considering a reduction in the amount of ethanol required to be blended into gasoline – have strained the relationship between producers and the EPA.

Farmers and ranchers argue they know how to best care for the land they rely on to survive.

Nebraska Department of Agriculture Director Greg Ibach, on the same conference call with the governor, summed it up.

“Whether it has been the EPA’s past clandestine flights over Nebraska to spy on livestock feeding operations, or their move to try and regulate individual farmer’s properties now through Waters of the U.S., or their foolish move earlier this year to try to change the RFS (Renewable Fuels Standard), the EPA is the biggest regulation problem that Nebraska farmers and ranchers face.”

Read the story at the JournalStar.com site here.

 

Demanding Clarification about Waters and Wetlands Maps

Also this week, Rep. Lamar Smith (R-Texas), chairman of the House Committee on Science, Space and Technology brought attention to a series of EPA maps highlighting waters and wetlands for all 50 states. The maps were updated in 2013, shortly after the EPA proposed its Waters of the U.S. rule, Smith says, and were never made public. When confronted at a hearing, EPA Deputy Administrator Bob Perciasepe agreed to release the maps.

The EPA responded, saying the maps show nothing more than the location of U.S. water resources and are in no way connected to the agency’s plan to clarify what bodies of water come under its regulatory authority.

Rep. Smith sent a letter to EPA Administrator Gina McCarthy demanding additional information about the agency’s motivation for having had the detailed maps assembled.

Smith writes, “These maps show the EPA’s plan: to control a huge amount of private property across the country. Given the astonishing picture they paint, I understand the EPA’s desire to minimize the importance of these maps. But the EPA’s posturing cannot explain away the alarming content of these documents. It’s time to give Americans a chance to make up their own minds about the EPA’s intentions. While the agency marches forward with a rule that could fundamentally re-define Americans’ private property rights, the EPA kept these maps hidden. So, today I will be posting the maps on the committee’s website for public review.”

In a press release, Smith says while the EPA has claimed the maps have not yet been used to regulate, they have failed to explain why the agency used taxpayer money to create them. The EPA paid a private contractor to make many of these maps, yet the details of the arrangement have not been disclosed. He says serious questions remain regarding the EPA’s underlying motivations for creating such highly detailed maps that were created just days after the EPA announced its Waters of the U.S. rule.

The letter requests all documents and communications related to the EPA’s contract to create these maps and demands that these and any other previously undisclosed maps in the EPA’s possession be entered into the official rulemaking docket for public review and comment. The letter also requests the EPA keep the public comment period open for at least 60 days to provide adequate opportunity for public review and comment.

The full letter can be found here. The maps are posted here.

EPA Responds to Map Accusations

The EPA responded by way of a blog post from Tom Reynolds, associate administrator of the EPA’s office of external affairs and environmental education. Reynolds sought to clarify the situation in the post, “Mapping the Truth,” in which he says the EPA has never and is not now relying on maps to determine jurisdiction under the Clean Water Act.

Reynolds writes:

“Before discussing the truth about the history and purpose of the maps, let’s review some basic facts. The Clean Water Act was passed by Congress to protect our nation’s water bodies from pollution. This law has nothing to do with land use or private property rights, and our proposal does not do anything to change that. The idea that the EPA can use the Clean Water Act to execute a land grab or intrude on private property rights is simply false.”

Reynolds also outlines the following points:

·         The maps were originally created in 2005 during the previous administration to understand the potential impact of Supreme Court decisions on the nation’s water resources.

·         The maps were revised last year with updated data from the U.S. Geological Survey, the scientific agency for cataloguing the nation’s natural resources.

·         Simply put, these maps do not show the scope of waters historically covered under the Clean Water Act or proposed to be covered under EPA’s proposed rule. These maps show generally the location of many streams, wetlands, rivers, lakes and other water bodies. They serve as a tool for visualizing how water flows across our nation and in regions of the country.

·         EPA has never and is not now relying on maps to determine jurisdiction under the Clean Water Act.

Read additional information in the blog post here.

House Committee Questions Purpose of EPA Waters and Wetlands Maps

House Committee Questions Purpose of EPA Waters and Wetlands Maps

A press release from the U.S. House Committee on Science, Space and Technology raises questions about the Environmental Protection Agency’s (EPA) creation of and intended use for maps highlighting waters and wetlands for all 50 states. The maps, which were created in 2013 shortly after EPA proposed its Waters of the U.S. rule, had never been made public. Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) sent a letter this week to Environmental Protection Agency (EPA) Administrator Gina McCarthy demanding additional information about the agency’s motivation for having had the detailed maps assembled. When confronted at a hearing, EPA Deputy Administrator Bob Perciasepe agreed to release the maps. 

Smith writes, “These maps show the EPA’s plan: to control a huge amount of private property across the country.  Given the astonishing picture they paint, I understand the EPA’s desire to minimize the importance of these maps.  But the EPA’s posturing cannot explain away the alarming content of these documents.  It’s time to give Americans a chance to make up their own minds about the EPA’s intentions. While the Agency marches forward with a rule that could fundamentally re-define Americans’ private property rights, the EPA kept these maps hidden.  So, today I will be posting the maps on the Committee’s website for public review.”  

  While the EPA has claimed the maps have not yet been used to regulate, they have failed to explain why the agency used taxpayer money to create them.  The EPA paid a private contractor to make many of these maps, yet the details of the arrangement have not been disclosed. Serious questions remain regarding the EPA’s underlying motivations for creating such highly detailed maps that were created just days after the EPA announced its Waters of the U.S. rule. 

The letter requests all documents and communications related to the EPA’s contract to create these maps and demands that these and any other previously undisclosed maps in the EPA’s possession be entered into the official rulemaking docket for public review and comment.  The letter also requests EPA keep the public comment period open for at least 60 days to provide adequate opportunity for public review and comment.      

Tom Reynolds, associate administrator of the EPA's office of external affairs and environmental education, sought to clarify the situation in a blog post entitled, "Mapping the Truth." He says EPA has never and is not now relying on maps to determine jurisdiction under the Clean Water Act. Read his blog post here. 

The full letter can be found here.

The maps are posted here.

Justice Department Requires Divestiture in Tyson Foods Acquisition of Hillshire Brands

Justice Department Requires Divestiture in Tyson Foods Acquisition of Hillshire Brands

The Department of Justice announced today that it will require Tyson Foods Inc. to divest Heinold Hog Markets, its sow purchasing business, in order to proceed with its $8.5 billion acquisition of The Hillshire Brands Company.  The department said that, without the required divestiture, the transaction would have combined companies that account for more than a third of sow purchases from U.S. farmers, thereby likely reducing competition for purchases of sows from farmers.

Three state attorneys general – of Illinois Iowa, and Missouri – joined the department in the civil lawsuit filed today in the U.S. District Court for the District of Columbia to block the proposed transaction.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the department’s lawsuit.

“Farmers are entitled to competitive markets for their products.  Today’s proposed settlement will help ensure that hog breeders in the United States will continue to receive the benefits of vigorous competition when selling sows,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division.  “Without the divestiture, the proposed acquisition would have eliminated a significant customer for farmers’ sows and likely would have resulted in less competition in this important agricultural market.” 

Sows are sold by farmers for processing into sausage.  Both Tyson’s Heinold Hog Markets and Hillshire buy sows from U.S. farmers.  Heinold Hog Markets buys sows from farmers, sorts the sows at buying stations and resells and trucks the sows to sausage producers.  Hillshire buys sows directly from farmers, which it then makes into sausage sold under the Jimmy Dean and Hillshire Farm brands.  The acquisition of Hillshire by Tyson Foods Inc. would combine two major purchasers of sows from farmers in the United States and eliminate the benefit farmers have received from the competition between Hillshire and Tyson’s Heinold Hog Markets.

Under the terms of the proposed settlement, Tyson must divest Heinold Hog Markets in its entirety to a buyer approved by the Antitrust Division. 

Tyson Foods Inc. is a Delaware corporation with its principal place of business in Springdale, Arkansas.  Tyson is one of the world’s largest meat companies.  It produces, distributes and markets chicken, beef, pork and prepared food products.  Tyson Hog Markets Inc., a subsidiary of Tyson and Tyson Fresh Meats Inc., buys and resells sows through its Heinold Hog Markets division.  In 2013, Tyson had total revenues of approximately $34.4 billion; Heinold Hog Markets had overall revenues of approximately $270 million.

The Hillshire Brands Company is a Maryland corporation with its principal place of business in Chicago, Illinois.  Hillshire is a manufacturer and marketer of brand name food products for the retail and foodservice markets, including sausage, hot dogs and luncheon meats.  Its brand names include Jimmy Dean, Ball Park and Hillshire Farm.  Hillshire’s total revenues were approximately $3.9 billion for the year ended June 29, 2013.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy, and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 8000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed final judgment upon finding that it is in the public interest.

Are Livestock Births the Latest Reality Entertainment Trend?

This Labor Day weekend, Animal Planet unveils the introduction of its first-ever LABOR LIVE multimedia event. Throughout the holiday weekend, live animal births from the Nebraska State Fair will be broadcast as they happen via the LABOR LIVE Cam on Animal Planet L!VE, a digital destination for round-the-clock access to animals. Animal Planet television viewers will be made aware of every calf, lamb, piglet, and chick delivery occurring online with breaking on-air birth alerts. The cam is live now at animalplanet.com/laborlive.

Each year, the Nebraska State Fair welcomes hundreds of thousands of visitors and Animal Planet L!VE is inviting the Internet to join in and celebrate the beauty of birth. The Birthing Pavilion provides State Fair guests the opportunity to witness live animal births under the supervision of trained professionals from the University of Nebraska School of Veterinary Medicine and members of the Nebraska Veterinary Medical Association.

With expert commentary from University of Nebraska veterinarians, the LABOR LIVE Cam will broadcast 24/7 from the Pavilion, which is the temporary home to expecting cows, sows, ewes and chickens.  Animal Planet L!VE will cover breaking births in addition to offering a schedule of programming including a morning review and lunchtime chats with experts.

“The miracle of birth is perhaps the most beautiful and wondrous moment in all of the nature, and Animal Planet will offer viewers the unique chance to witness it live,” said Rick Holzman, General Manager and Executive Vice President of Animal Planet. “This is just the beginning of a significant initiative where Animal Planet will offer our audience unprecedented live coverage of animal births and other astonishing moments of the natural world, both on air and online at Animal Planet L!VE.”

"Animal Planet's presence further exemplifies the Nebraska State Fair's mission to focus on interactive agriculture and educational experiences. The ability to take the Nebraska State Fair Birthing Pavilion and make it available to a worldwide audience is an opportunity that doesn't come along too often,” said Nebraska State Fair Sponsorship and Marketing Director, Shaun Schleif. "The opportunity to see live births and baby animals taking their first steps in their first few days of life is something that most folks don't have the opportunity to observe. Animal Planet is making that possible, and we're extremely grateful for that."

Consumer Pork Costs Projected Higher

The U.S. Department of Agriculture (USDA) predicts consumers will be spending 6.5% to 7.5% more this year for pork eaten at home. Beef and veal showed similar expected increases, while the USDA expects poultry to increase 3% to 4% this year.

According to the USDA’s Food Price Index, consumers paid 0.7% more for pork from June to July of this year, and 10.9% more year-over-year from July 2013 to July of this year. That same increase was shown from December 2013 to July of this year.

The USDA also predicts consumers will see an increase of 3% to 4% in the cost for pork in 2015.

The price of food that consumers will eat away from home is also expected to increase, 2.5% to 3.5% for this year, and 2% to 3% for 2015.

U.S. Appears to Have Lost WTO MCOOL Battle

U.S. Appears to Have Lost WTO MCOOL Battle

Remember, you heard it here first! Well, maybe not first but you have been hearing it here for a long time: The United States would lose again – and ultimately – with the World Trade Organization (WTO) on mandatory country-of-origin labeling (MCOOL). That is the word that has appeared in a number of published accounts the past few days. I have been able to corroborate those reports with my own sources.

The WTO has circulated to the affected countries its finding that last November’s revised MCOOL rules still violate WTO regulation. Those findings will be made public this fall. We hear that will occur in September. At that time, the United States will have yet another opportunity to appeal a WTO decision, potentially dragging out this fiasco even further.

Canada has already announced a detailed list of U.S. products that it will target for retaliatory tariffs should the ultimate decision be that MCOOL is a trade violation. On that list are U.S. pork and beef and a number of other agricultural and non-agricultural products whose inclusion has had the desired effect of waking up other trade groups to this issue. In addition, the list has been targeted at a number of key legislators’ home districts. There’s apparently nothing like potential trade sanctions to get non-agricultural businesses and politicians interested in food.

I could not locate a retaliation list from Mexico, but news reports have stated for some time that Mexican authorities have indeed compiled one. The Mexicans know how to play this game and will almost undoubtedly do the same kind of strategic targeting that the Canadians have done.

So where do we go from here? I have said since the earliest days of MCOOL debate back in 2003 that this program would eventually be found to violate our free trade commitments. A further appeal of this ruling will be, I believe, as futile as past appeals so it is time to take action. I’m pretty confident that the action the U.S. Department of Agriculture (USDA) will choose, however, will be to appeal and thus buy more time.

But what are the options when that appeal fails? I suppose the USDA could try yet another rule but after two attempts to both enforce the law and satisfy the WTO, the USDA doesn’t likely have any new rabbits in its hat. That means that the program must simply be suspended or that Congress will have to change the law in a manner that will allow WTO-compliant rules to be written. A day of decision is drawing nigh.

Should all of that fail, Mexico and Canada will be free to impose retaliatory tariffs. Canada and Mexico were our second and third largest markets, respectively, for beef cuts in 2013. They were third and second, respectively, in the U.S. pork export market rankings. Mexico is our largest market for pork variety meats and is challenging Japan virtually every month to become the largest pork muscle cut market. Year-to-date, Mexico trails Japan by a mere 1.4% in total pork muscle cut exports.

Should they be imposed, Mexico’s tariffs will hurt much more than will Canada’s. That conclusion results from Canada’s position as a net exporter of both beef and pork. As such, any reduction of imports from the United States will be offset by more Canadian product remaining at home. Neither Canadian prices nor consumption will change. U.S. suppliers will be able to capture the international markets left short by reduced Canadian exports thus having little or no impact on prices in the United States.

Mexico, though, is not an exporter and any reduction in imports from the United States will drive prices upward there, reducing the quantity demanded. Mexico may turn to other suppliers for part of that “shortage” but will not likely be able to backfill at anywhere near the same price as the foregone U.S. product. The amount of the price increase in Mexico and the resulting reduction in imports from the United States will depend on the size of the tariff imposed – something we know nothing about at this time. Should a 10% tariff similar to that imposed in the trucking dispute be imposed, I believe the impact on U.S. pork prices will be 2% to 3%.

It’s unfortunate we have had to go down this road when it was so clear a decade ago that we would end up in this place. I only hope that the decision-makers in Washington will finally face up to the damage they are about to force on U.S. livestock and meat producers.

Hog Production Definitely Not for Faint of Heart

pigs at a feeder

The past eight months have made for one of the most interesting time frames a lender could work in during their life time. Fortunately, the hog industry climate has been more about unprecedented profitability and funding margin calls than some of the not-so-pleasant times of the past, i.e. 2009 and 1998. The sheer increase in volume required to fund the run-up in March and the subsequent fall-out in August has made for some of the largest swings ever seen in such a short amount of time. We’ve seen 12-month forward margins go from $20 per head to $72 per head and back to $36 per head between February and August. Definitely not a business for the faint of heart!

The cool summer helped keep weights up and offsetting the shorter hog numbers, so supply was not as short as expected or feared by the market. The recent Russian announcement banning imports, and China’s push to continue banning products grown using such items as ractopamine are certainly not helping the cause, but don’t appear to be anything new given both countries’ past history. As of Aug. 20, the Iowa-Southern Minnesota base cash price is down to $96.68, only a few short weeks removed from cash prices in the $120s.

Continued volatility has again reinforced the need for a disciplined marketing strategy on the part of producers and the need for a lender who understands the volatile markets. Not to fear, as margins are still strong and there could be a chance of a rebound in hog prices going into the fall if we don’t see as much of the normal seasonal tendency for increasing weights. It has also been reported that liquidation of the Chinese herd has been under way, due to losses, for much of the year given their corn price which has been equivalent to $10 per bushel. It looks like there could be liquidation of as many as 4.5 million sows or 50 million finished animals annually which could create a supply problem next year. It will be interesting to see how long the Chinese will continue to throw up road blocks to imports if this is the case.

We see a lot of data and it certainly appears porcine epidemic diarrhea virus (PEDV) breaks have exceeded 60% of the U.S. sow heard. However, at the same time the instances of porcine reproductive and respiratory syndrome (PRRS) virus have dropped to about half of the historical average. This is setting us up for an interesting fall, with all the investments involved with managing the issue ‑ biosecurity, truck washes and dedicated trailers to mention a few. It’s still really difficult to tell how PEDV and PRRS could affect herds. Producers who have stayed disciplined in their approaches to margin management no doubt lost on part of the run-up but have gained on the recent curtailing of hog prices. It will be interesting to see if another opportunity could be created early this winter if PRRS and PEDV rear their ugly heads once again.

For now things still look good for producers’ bottom lines over the next 12 months. Producers should, however, heed the lesson currently being learned by crop producers in that prices don’t stay high forever and we need to remain disciplined in how we look at acceptable returns going forward. That said, we’re still the low-cost producers and so long as we can maintain that position and provide an exceptional product the industry will succeed.

To help maintain this position all of us in the industry must also continue to advocate for our industry and provide a positive voice. I encourage you to engage in discussions with consumers and non-ag folks whenever possible, whether it be by opening your barn doors to visitors, socializing at the local cafe or via social media. By listening and sharing our stories, we can build bridges that will influence others and encourage support.

Justin has worked in the hog industry his entire life and has been with AgStar Financial Services since 2008. For more insights from Justin and the AgStar Swine Team, including their weekly video Hog Blog, visit AgStar.com. If you’d like more information on AgStar’s Margin Manager Tool check it out at AgStar.com/MarginManager.

Russians to Pay More for Food

According to a number of press reports, Russian consumers will see an increase in food prices as a result of Russian President Putin’s ban on food imports from the U.S., EU, Australia, Canada, and Norway.  Some officials believe annual inflation will increase to 8 percent next year which is above the Russian target of 4.5 percent.  According to the report, the ban on food will add 2 percentage points to inflation in the next 12 months.