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Articles from 2014 In September


Report Indicates Swine Industry has Taken Advantage of PEDV Impact

Report Indicates Swine Industry has Taken Advantage of PEDV Impact

The U.S. Department of Agriculture’s Hogs and Pigs report, released on Friday, indicates that the U.S. industry has moved quickly to take advantage of record profits and backfill productivity losses caused by porcine epidemic diarrhea virus (PEDV). Every key number in Friday’s report was larger than anticipated by market analysts. The report is bearish and CME Group Lean Hogs futures are lower across the board as of mid-session on Monday.

The USDA’s June report has proven to have been too low on market hog numbers with actual slaughter running about 3.5% lower than the inventories in that report would have indicated. The USDA revised its December-February pig crop downward by 3.6% to reflect this slaughter discrepancy, meaning that the March report indeed underestimated the impact of PEDV during the winter months. Curiously, the USDA reduced December-February farrowings by the same percentage, thus leaving litter size unchanged at 9.53 pigs per litter. Given what we know of PEDV, what do you think it impacted more in the December-February quarter – the number of sows that had litters or the number of pigs saved per litter? We definitely think it was the latter.

This is hardly a distinction without a difference. As 2014 ends and 2015 begins, the key issue is going to be how much pigs saved per litter rebounds from the abysmal PEDV-driven levels of one year ago. We are now into a time period where we will be comparing to PEDV-impacted figures one year ago. Will PEDV have the same impact as last year, thus leaving litters the same as one year ago or will the PEDV impact wane a bit with vaccines, better management, better biosecurity, etc., thus allowing us to put year-on-year increases in place for this year? And in either case – what was the correct year-ago litter size? The USDA says it is 9.53 for December-February quarter even though the impact of PEDV should have been on litter size, not litters farrowed. More shooting in the dark. Or at least deep twilight! We’ll all do our best.

The key numbers from the report appear in Figure 1 and 2. Some of their implications are:

  • Pigs kept for marketing number 59.441 million, 2.7% lower than one year ago. Analysts had expected that figure to be down 3.8% so this report included about 654,000 more pigs headed for market over the next six months than were expected.
  • Pigs weighing 180 lb. and more on Sept. 1 numbered 10.118 million head, 5.7% lower than one year ago. Slaughter since Sept. 1 is down 6.3% so this number appears reasonably accurate – and definitely accurate enough to not cast any doubt on the report.
  • The total inventory of pigs weighing from 50 to 179 lb. – pretty much all of the pigs that will come to market in the fourth quarter – was 29.805 million, down 2.4% from one year ago.
  • A breeding herd 1.8% larger than last year. That is slightly larger than analysts were, on average, expecting and a number that, given the size of sow slaughter, implies a high level of gilt retention this summer.
  • Farrowing intentions of 104.0% and 103.8% of year-earlier levels the next two quarters. At first glance, those figures appear high from a 101.4% breeding herd but Figure 2 shows that both are well within reason from a historical viewpoint. In fact, the September-November farrowing rate of 48.8% of the breeding herd remains well below the roughly 50% level witnessed consistently before 2013.
  • Average litter size (pigs saved per litter) of 10.16 for the June-August quarter is 1.6% lower than one year ago, but sharply higher than the past two quarters. This figure along with June-August farrowings of 100.6% of 2013 put the June-August pig crop at 29.539 million head, still 1.1% lower than one year ago, implying slightly lower slaughter in the first half of 2015.

So what will be the impacts? We have 2014 fourth quarter commercial slaughter at 28.9 million head, 3% lower than one year ago. That number is slightly larger than the mid-weight inventories suggest, primarily because we still think the USDA has under-estimated the impact of PEDV a bit. That miss is getting smaller but it is not zero in our opinion.

Slaughter in the first quarter of 2015 will be about 1% lower than one year ago and second quarter slaughter could be up 4-5%. Third quarter slaughter will be up about the same as the second quarter. The critical factor will be the change in litter size.

With those kinds of increases, hog prices will be sharply lower than those of 2014 but let’s remember where we are starting this descent. The average national net negotiated price in first quarter of 14 was $92.46. The 2015 first quarter price will be slightly lower than that as higher market weights will offset the slight decline in hog numbers. The prices for second quarter and third quarter were $116.83 and $114.84. Five percent increases in hog numbers and another 1-2% on weights would put prices down 12-20%, depending on the elasticity of demand, but that would still leave them at $92-$102 when costs will be in the mid-$60s.

The industry is clearly growing and likely poised for more growth. That should be no surprise given the levels of profits forecast for 2015. Higher 2015 supplies will push prices lower but not nearly as much as costs have declined. My hog model shows 2015 costs down 17.3% from 2014 and 30% from 2013. Even with the expected damage that this report will do to lean hogs futures on Monday, profits will remain near $40 per head, their second highest level on record.

We will include our table of supply and price forecasts in next week’s “Weekly Preview.”

Understanding PEDV Diagnostic Tests and Tools

Porcine epidemic diarrhea – the disease (PED) and the virus that causes it (PEDV)  – currently dominate pork producers’ concerns as colder months approach.  Detecting evidence for presence of the virus is done by using any of a number of different diagnostic tests. Diagnostic tests can be viewed as “diagnostic tools.” Like a mechanic’s shop, some of the tools are better suited for certain jobs than others, and not every shop has the same repertoire of tools.

There are three general tool types:

  1. Those that detect the agent to answer the question, “Is it there?” For example, to confirm PEDV is present in a clinical specimen, or to try to confirm a negative in a nonclinical surveillance specimen.
  2. Tests that find the agent in a lesion to answer the question, “Is it causing disease in this animal today?”
  3. To determine if animals were previously infected via detection of an antibody and answer the question, “Has this animal been previously infected?”

PCR (polymerase chain reaction) Test

PCR is a common test used to detect segments of nucleic acid (genes) to answer the question, “Is it there?” Depending on application, the design, target and method of a PCR test can be quite different. For example, PCR for PEDV may target one of several different genes (S gene, N gene or M gene), and can be performed as “real-time,” “gel-based,” or “nested.” It is important to recognize that there are differences and underscores the risk in comparing results between laboratories. Laboratories often use different PCR tests and those test results can be interpreted differently depending on sample type, test used and context of sampling. Because PCR only detects a small portion of the PEDV genome, a positive test does not confirm that the sample contains live, viable or infective virus. It is important to note that currently bioassay (feeding some of the sample to susceptible piglets) is about the only way to answer the question “Does this sample contain live, infective PED virus?”

The commonly used “real-time PCR” test results are reported as positive or negative, often in conjunction with a cycle threshold (Ct) number. The “Ct” is the number of times that the PCR machine has to magnify the target (cycles) until it becomes detectable (threshold). Each number increment is a two-fold difference in amount of targeted nucleic acid within the sample. The lower the Ct, the more genomic copies (virus) are present. Each Ct unit is two-fold difference in quantity of virus. For example, there is twice as much target in a sample with Ct of 25 than there is in a sample with Ct of 26.  A Ct of 20 is considered quite positive, and a Ct=20 has 1,000x more target in the sample than does a Ct=30. Ct>37 is current considered negative for the target by the Iowa State University Veterinary Diagnostic Laboratory (ISU VDL).

PCR is very sensitive and very specific, perhaps able to detect a single molecule of the target within a test sample. Pigs usually shed PEDV for about 21 days (+/- 10 days) after infection and the virus can be detected in contaminated materials for days, weeks or even months depending on the conditions.

There are two general themes for PCR test application, to confirm PEDV is present when there is disease (“diagnostic mode”) and to attempt to prove PEDV is not present in pigs, environment, feed or substance (“surveillance mode”). These two general applications are at the extremes in the expected amount of virus present in samples. With clinical disease, a large amount of virus is shed whereas in surveillance, one is attempting the impossible – to “prove a negative.”  

PCR confirmation of presence of PEDV when there are clinical diarrhea laboratory submissions are straightforward in that very few samples, usually of feces, rectal swabs or oral fluids, are required to be tested to confirm disease. However, when in “surveillance mode,” that is trying to confirm animals or environment (feed, pit, surfaces, transport vehicles, etc.) are negative for virus, many samples of several different sample types may need be tested negative to have confidence that the virus is not there. Consult your veterinarian and/or diagnostic laboratory for appropriate sampling techniques and strategies.

PCR samples should be preserved by immediate refrigeration or freezing. Sample types are many, but most commonly samples will be submitted as tissues, feces, rectal swabs, oral fluids (to confirm clinical disease) as well as environmental wipes, feed, water, manure, etc., surveillance. Please be clean in packaging and shipping samples. Contamination during unpacking of soiled or leaky containers or submission materials can compromise the accuracy of your results as well as results of others.

IHC (immunohistochemistry) and Histopathology

IHC is a useful diagnostic tool which detects antigen within infected cells in formalin-fixed tissues. This technique is often used to answer the question, “Is it important?” The IHC test is much less sensitive in detecting PEDV than is PCR, but it has an advantage in detecting the virus within tissue lesions thereby confirming a role in disease. With PED, the PEDV will be detectable in sections of intestine for five to 10 days (for examples see Figures 1 and 2).

Histopathology and IHC are excellent quality assurance tools that add confidence that the agent(s) detected are actually causing disease. Histopathology can implicate a role for insult types not originally considered, including rotaviruses, E. coli, TGE, coccidia, Salmonella, clostridia or non-infectious contributors. It is important that multiple sections of small intestine (at least six pieces, 1-in. long) from acutely affected pigs be placed in 10% formalin immediately after euthanasia. Be gentle while removing and placing the intestine in formalin as artifacts and distortion can hinder interpretation of lesions and testing.  

 Figure 1: Early PEDV infection (~8 hrs Post-Infection) in neonatal pig. Infected cells (brown stain) line the villi.

 

Figure 2: Later PEDV infection (~36 hrs PI): where only a few infected cells remain (brown stain).

Antibody Detection (Serology)

Another set of tools in the diagnostic toolkit are those that detect antibody specific for PEDV. Antibody is formed as part of an immune response and becomes detectable after disease subsides. Antibody testing, sometimes referred to as “serology,answers the question, “Has it been there?” A positive result suggests that an animal was previously infected (or in young animals, antibody passively acquired via colostrum) but should not be interpreted as predicting animals are “immune” to disease. Similarly, the absence of antibody in serum does not mean there is no immunity, particularly for mucosal pathogens such as PEDV. In general, antibody detectable in serum for PEDV is relatively short-lived, meaning it does not survive three to five months. Samples that contain antibody and may be used for testing are usually serum, but oral fluids, colostrum and milk may also be sometimes used IF the particular test is designed and validated for this.

Following the successful isolation and propagation of PEDV in cell culture at the ISU-VDL, an indirect immunofluorescence assay test (IFAT) was developed and implemented in September 2013 for the detection of PEDV antibodies in swine serum. The diagnostic sensitivity and specificity of IFA is estimated to be 95.6% and 98.7%, respectively, using a dilution of ≥ 1:40 as cut-off. However, as noted above, IFAT has been found to have a relatively short duration of positivity (e.g. two months as demonstrated in Table 1). Several ELISA (enzyme-linked immunosorbant assay) tests have been evaluated and are available at various laboratories. Similar to the IFAT, most of the ELISA tests only detect antibody for a relatively short time after infection.

In September 2014, a new whole-virus ELISA test to measure IgG (WV IgG ELISA) became available at ISU-VDL which offers advantages over IFAT, including: amenable to handling large number of samples, rapid turn-around and greater diagnostic sensitivity. The performance of the PEDV WV IgG ELISA was compared to the PEDV IFAT using serum samples collected from four-week-old pigs inoculated with PEDV USA/Iowa/18984/2013 under research conditions (Table 1). Anti-PEDV IgG serum antibody was detected between seven (ELISA) and 10 (IFAT) days post-inoculation (DPI). All animals were positive by DPI 21, but the detection rate and sensitivity of the IFAT declined over time. Thus, the IFAT and ELISA have similar detection rates at early stages of the infection, but the PED WV IgG ELISA test detected antibody longer than the IFAT.

The diagnostic specificity of the PEDV WV ELISA was further evaluated using +500 serum samples collected in December 2011 and January 2012, i.e., these samples were collected when the U.S. swine herd was still free of PEDV. Diagnostic specificity of the ELISA was estimated to be 98.5% in that sample set. Currently, during the onboarding process of this new assay, the ISU VDL is further evaluating the utility of this assay as a PEDV antibody screening assay in serum, oral fluids, milk, colostrum and feces but continues to use the PEDV IFAT as confirmatory test when needed. There is an expectation that the PEDV WV ELISA will be validated for milk, colostrum and oral fluids soon. 

Seaboard Announces Triumph Foods Purchased 50% Ownership in Daily’s Premium Meats

Seaboard Corp. announced Sept. 26 Triumph Foods purchased a 50% ownership in Daily’s Premium Meats, the processed meats division of Seaboard Foods, which produces and markets raw and precooked bacon, ham and sausage. Daily’s Premium Meats will be owned 50/50 by Seaboard Foods and Triumph Foods as of Sept. 27. As a result of the transaction, Seaboard received cash proceeds of $72.5 million and will recognize an estimated pre-tax gain of approximately $55.0 million, subject to final working capital adjustments.

Daily’s Premium Meats offers a variety of processed pork items from signature honey-cured bacon to Applewood-smoked bacon to naturally smoked hams to breakfast sausages. Operating since 1893, Daily’s has further processing plants located in Salt Lake City, UT, and Missoula, MT.

In addition to the Daily’s partnership, Seaboard Foods, pursuant to an agreement, markets and sells fresh products produced by Triumph’s St. Joseph, MO, pork processing plant, as well as products produced by Seaboard Foods’ Guymon, OK, pork processing plant. Internationally, fresh pork products are marketed under the Seaboard Farms and St. Joe Pork brands. Domestically, fresh pork products bear the PrairieFresh Premium Pork brand. Processed meats, such as bacon, hams and breakfast sausage, will continue to be marketed under the Daily’s Premium Meats brand.

Cambodian Company Looks to Double Pig Production

A Cambodian company has announced plans to double its hog production by 2019 to meet that country’s pork demand. Uthai Tantipimolphan, president of CP Cambodia, a subsidiary of Thai conglomerate Charoen Pokphand Co. Limited, said the company will spend $8 million to increase production from the current one million hogs to two million over five years.

Cambodia needs nearly 200,000 of swine per month, and currently CP Cambodia supplies some 60,000 head – both piglets and 3-week-old weaning piglets – to local markets per month. According to the Cambodian Pig Raising Association, Cambodia imports more than 1,000 head of swine from neighboring nations such as Vietnam and Thailand every month.

Finish TPP Without Japan

The National Pork Producers Council (NPPC) is calling on the administration to complete the Trans-Pacific Partnership (TPP) trade negotiations without Japan. In a press release, the NPPC said that Japan continues to refuse to end its protective tariffs on its “sacred” agricultural products of beef, pork, rice, wheat, dairy and sugar. This could risk completing the TPP negotiations. The NPPC said, “Acquiescing to Japan’s demand would represent a radical departure from past U.S. trade policy, which has held to the principle that free-trade agreements (FTA) must cover virtually all trade between the parties. The exemptions from tariff elimination demanded by Japan would be more than all of the tariff line exemptions contained in the previous 17 FTAs combined the United States has implemented this century. Pork never has been excluded from tariff elimination in a U.S. free trade agreement.”

A concern of the NPPC and other agricultural groups is that agreeing to Japan’s demands would undercut the U.S.’s efforts for tariff liberalization during the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations with the European Union (EU). The EU could demand similar exemptions. Last week no progress was made during negotiations between the United States and Japan on the critical issues of agriculture and automobiles. In a statement following the negotiations, the U.S. Trade Representative said, “While there were constructive working level discussions over the weekend, we were unable to make further progress on key outstanding issues.” 

Senators Want More Resources for Antibiotic Resistance

Sens. Dianne Feinstein (D-CA), Kirsten Gillibrand (D-NY), and Elizabeth Warren (D-MA), are calling on the administration to double the funding for the National Antimicrobial Resistance Monitoring System (NARMS) by requesting $15 million in its FY ’16 budget. NARMS tracks antibiotic resistance in foodborne pathogens.

The senators said in a letter to President Obama, “NARMS collects samples of bacteria from animals, meat and poultry products, and human cases of foodborne illness and analyzes them for trends in antibiotic resistance. This important data allows the CDC, the Food and Drug Administration and the Department of Agriculture to accelerate their response to emerging public health threats.” NARMS was funded at $7.8 million in FY ’14.

Global Alliance for Climate-Smart Agriculture

Secretary of Agriculture Tom Vilsack and Secretary of State John Kerry announced the launch of the Global Alliance for Climate-Smart Agriculture. The Alliance is to promote greater international engagement on ways agriculture can help reduce the impact of climate change. Vilsack said that producers in the United States and around the world are feeling the impact of climate change by experiencing production challenges from “extended droughts, more severe flooding, stronger storms, and new pests and diseases.”

Vilsack said the Alliance “offers the opportunity to collaboratively share knowledge, make investments and develop policies that will empower all producers to adapt to climate change and to mitigate its consequences. Long-term global food security depends on us acting together now.” The Alliance will include participation from governments, businesses, civil society groups and other groups around the world.

Hogs and Pigs Report Suggests Expansion, But PEDV Gets the Last Word

Hogs and Pigs Report Suggests Expansion, But PEDV Gets the Last Word

The inventory of all hogs and pigs in the United States on Sept. 1, 2014 was 65.361 million head. This was down 2.3% from Sept. 1, 2013, but up 6% from June 1, 2014. Pre-report estimates had predicted a 3.4% decrease.

Summarizing his thoughts upon the release of the report, Ron Plain, professor of agricultural economics, University of Missouri, Columbia, MO, says, “Across the board, every one of these numbers came in higher than trade expectations, so in my mind, this is a bearish Hogs and Pigs Report.”

Breeding inventory, at 5.92 million head, was up 1.8% from last year, and up 1% from the previous quarter.

Market hog inventory, at 59.441 million head, was down 2.7% from last year, but up 7% from last quarter.

The June-August 2014 pig crop, at 29.539 million head, was down 1.1% from 2013. According to Steve Meyer, Paragon Economics, Adel, IA, analysts had expected that number to be down 2.4%. Sows farrowing during this period totaled 2.907 million head, up slightly from 2013 and close to pre-report estimates. The sows farrowed during this quarter represented 50% of the breeding herd, according to the USDA. The average pigs saved per litter was 10.16 for the June-August period, compared to 10.33 last year. Pigs saved per litter by size of operation ranged from 8.00 for operations with 1-99 hogs and pigs to 10.20 for operations with more than 5,000 hogs and pigs.

Hog producers in the United States intend to have 2.89 million sows farrow during the September-November 2014 quarter, up 4% from the actual farrowings during the same period in 2013, and differing from the pre-report expectations of a 3.2% increase.

Intended farrowings for December-February 2015, at 2.87 million litters, came as a surprise to analysts. The farrowing intention tally is up 4% from 2014, and up 3% from 2013. Prior to the release of the report, analysts had expected only a 1.7% increase over 2014 figures.

The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 46% of the total United States hog inventory, unchanged from last year.

A team of industry experts summarized their thoughts during a Pork Checkoff-sponsored press conference following the Hogs and Pigs Report’s release. “The industry is making money, so one should expect farrowings to increase and the Report says that is happening. The really bearish numbers in this report are when you get to fall (farrowing) intentions, up 4% and December 2014 to February 2015 farrowing intentions expected to be up 3.8%,” Plain explains. “Those are big increases, and unless we have pigs/litter numbers down due to health reasons and the porcine epidemic diarrhea virus (PEDV), we could start to see some big increases in the pig crop in front of us, and ultimately, big increases in slaughter.”

Daniel Bluntzer, director of research with Frontier Risk Management, Corpus Christi, TX, says the number of pigs saved per litter is a key consideration to the predicted increase in hog numbers. “What is that pigs/litter number going to look like moving forward with the disease problems?” He says even though the pork industry is not going to return to the same pigs-per-litter numbers that were seen prior to the PEDV outbreak for some time, the combination of pigs saved and breeding herd increase could mean a noticeable increase in slaughter totals in 2015. “With the increase in the total breeding herd, we start looking at slaughter figures up as much as 1-2% in the first quarter, up as much as 5% in the second quarter of next year, and maybe up as much as 8% in the third quarter, and then trailing off to 6.5% in the fourth quarter, assuming that those pigs/litter numbers continue to creep higher,” Bluntzer says. “That is an enormous amount of hogs, year-over-year, and something we probably haven’t seen in a decade or so. At the same time, I think we all have to take it with a grain of salt. Will this come to pass, or are those numbers too large? It does certainly point to a lot more hogs into next year.”

The experts did agree that the unknown in the equation is the impact PEDV may have this winter. “The thing that hit me was the 4% increase in farrowing intentions,” notes Kevin Grier, independent livestock and meat market analyst, Guelph, Ontario, Canada. “That’s got to be the one factor that we all scratch our heads about with regard to the impact of PEDV in terms of trying to pencil out a forecast. Are we going to stick with that 4%, or are we going to see that trimmed dramatically because of PEDV?”

Read the Sept. 26, 2014 USDA Quarterly Hogs and Pigs Report online here.

August Red Meat Production Down 10 Percent From Last Year


Commercial red meat production for the U.S. totaled 3.80 billion pounds in August, down 10% from the 4.20 billion pounds produced in August 2013, according to USDA.

Pork production totaled 1.75 billion pounds, down 10% from the previous year. Hog slaughter totaled 8.27 million head, down 13% from August 2013. Average live weight was up 11 pounds from the previous year, at 282 pounds.

Beef production, at 2.02 billion pounds, was 10% below the previous year. Cattle slaughter totaled 2.50 million head, down 11 percent from August 2013. The average live weight was up 19 pounds from the previous year, at 1,329 pounds.

Veal production totaled 7.1 million pounds, 22% below August a year ago.

Calf slaughter totaled 43,600 head, down 32 % from August 2013. The average live weight was up 37 pounds from last year, at 277 pounds.

January to August 2014 commercial red meat production was 31.2 billion pounds, down 4% from 2013.

Accumulated beef production was down 6% from last year, veal was down 12%, pork was down 2% from last year, and lamb and mutton production was down 1%.

Purdue Info Night Targets Pork Industry Careers

The Purdue University Pork Interest Group will hold its annual fall career night with speakers from the pork industry to educate students on internship and job opportunities in the field.

The event will be Oct. 6 from 5:30 to 8 p.m. in lecture room 1-105 of Lilly Hall on Purdue's campus. A pork dinner donated by Zoetis, with side dishes sponsored by industry companies participating, will be served in the front lobby until 6 p.m.

Immediately after the dinner, six speakers will give short presentations on major career areas in the pork industry. There will also be a presentation highlighting the benefits of interning and tips on how to make the transition from life at college to work.

Speakers and topics:

* Ian Brooke, The Maschoffs: Commercial production.

* Joe Walder, PIC-Genus: Seed stock production.

* Jon Ferrel, Elanco: Pharmaceuticals in the pork industry.

* Jim Harding, Indiana Packers Corp.: Pork processing.

* Doug Erla, JBS-United: Feed industry.

* Max Rodibaugh and Daren Miller, veterinarians: Careers in veterinary medicine.

* Karen Lehe, Merck Animal Health: The benefits of interning.

* Brandi Kuntz, The Maschoffs: Transitioning from college to the workplace.

The event is open to the public, including college students and youth interested in the pork industry, regional pork producers and others in the industry.

Food will be prepared by Joseph Warter, a Purdue animal sciences student who has more than 13 years of experience as a chef and recently interned at Zoetis. He will talk about his experiences as an intern and give his views on why interning is worthwhile.

More than 10 companies involved in the pork industry will have booths in the lobby before and after the event to talk to students about internship and career opportunities.

Those interested in participating in the free event should RSVP by filling out the form at http://www.ansc.purdue.edu/PIG/rsvp.htm by Oct. 4.