Canada – summertime & the living is easy
Bob Fraser – Sales & Service, Genesus Ontario bfraser@genesus.com
Always reluctant to reference anything to do with the pork industry as easy; this is a game of inches and not for the faint of heart. One needs to fight for the nickels and dimes because all too often that may be all there is. However as we enter the “dog days” of summer, there is reason for a certain contentment.
Crops to my eye from lots of driving throughout Southwestern Ontario and the microcosm of my front porch look good to quite good. Again from my front porch the corn is in full tassel, putting on cob and getting ready for pollination. For August 1st that would seem pretty much on schedule. Winter wheat across the road is all off (including straw) in the last couple days. I would expect this week would wrap up that project in most of the province.
To my knowledge the yield has been average or better with little to no quality issues. On down the Line soybeans and edible beans (in this case kidney beans) appear as good as one would want for the time of year. Seems the adage “rain makes grain” is running true. Where I’m situated I believe is reasonably representative, with better crops and worse crops but here would appear to be the average. Apologies for those with too much rain and those with not enough but that runs true virtually every year and doesn’t seem to be wide spread. Therefore it would seem unlikely for any significant change to feed prices in the coming year.
Hog profitability at the same time continues to be very encouraging. Here courtesy of Bob Hunsberger, Wallenstein Farm Supply shows the driver of the upbeat mood. Projected profits currently for the next 12 months are $12.11 on average and although a drop from the $24.75 of my last commentary still quite respectable and probably above average. Also present margins with average production of $54.28 and with excellent production of $72.68 have actually improved ten dollars from last commentary. Even showing Packer kills & cut gross margin of $44.36 suggesting win/win for the entire chain. (check table 1 bellow)
The final piece of good news comes with the expected but official announcement. Clemens Food Group is preparing to open its new pork processing facility in Cold water Township, Mich., on Sept 5. The plant is expected to bring 800 full-time jobs to the Detroit metropolitan area.Company officials joined local political leaders for the ribbon-cutting ceremony at the $256-million plant over the weekend, according to local media reports. Michigan Gov. Rick Snyder and Sen. Debbie Stabenow (D-MI) both spoke at the ceremony, noting the value that the agriculture industry brings to the Michigan economy, according to WTVB. The 650,000-sq.-ft. facility will have the capacity to process 11,000 hogs per shift when fully operational.
Although the bulk of the first shift is apparently covered by producer/investors any additional plant capacity on balance bodes well for producers if no more than keeping the other bidders “honest”. So seemingly lots of reason for contentment but also not a bad time as always to consider one’s blessings. Also not a bad time to consider how you make your operation “higher, stronger, faster” for the inevitable challenges ahead.
Enjoy your summer!
Categorised in: Global Markets
This post was written by Genesus