Jim Long, President-CEO, Genesus Inc.
The National Pork Industry Conference (NPIC) was held last week as a virtual event. Not an ideal way to do conferences as the huge benefit of personal interaction is missed. Fortunately, the NPIC organisation did a good job executing the conference under the circumstances that today’s reality forced them too.
Thanks for many of you who watched my talk on NPIC site and YouTube.
- Appears from a couple of the speakers they believe hogs are still backed up in the millions.
- Steve Meyer with the Brokerage Firm Kerns and Associates projects an increase in hog slaughter in 2021 vs. 2020. (2020 = 130,646 vs 2021 = 131,739)
- Steve Weiss one of the principles of NPIC (Century 21) and CEO Nutriquest indicates their data has breakeven top 25% producers 63-65¢ lb. lean (upper Midwest).
- Steve Meyer said that the extra sow slaughter this year of 220,000 more year to date, does not indicate significant sow herd reduction.
- Meyer’s spoke of Maxwell Foods 54,000 sows and Hitch Pork 15,000 sows being liquidated.
- Meyer’s explained CME average price for 2021 is currently 68.37. Kerns and Associates believe the average price in 2021 will be 56-59. Meyer recommended producers consider some hedging.
There were several other speakers with the NPIC conference. Next week we will discuss some of their thoughts.
Sow Mortality Analysis
We have looked at sow mortality and how it could affect the breeding herd inventory. We looked at Pig Champ data which is available on the Pig Champ website. Annual sow mean mortality in 2015 was 8.94%, in 2019 was 12.31% – an increase of 3.37%. If breeding herd is 6.3 million, the extra 3.37% equates to 212,310 sows a year or 4,000 extra dead sows a week. Kind of skews the analysis of historical sow liquidation to decide the current degree of herd liquidation.
Hog slaughter this past week was 2,618,000 a year ago 2,531,000. Daily slaughter capacity is about 500,000 with some days now reaching 480,000 plus. Excellent Packer Gross Margin has been a great stimulus to get hogs killed. Now maybe with less lucrative unemployment benefits the labour force for all plants will move towards capacity helping production.
National Daily Base Hog Carcass Weights first 4 days last week averaged 206.80 lbs; the week before 208.01 lbs.; year before 208.48 lbs. If hogs backed up in millions as some claim it will be first time in history backed up hogs have lower slaughter weights.
Producing Better Pork
As an industry we are obsessed with costs, not necessarily a bad thing. What we see very rarely, if any talk, on how to grow our business by increasing per capita consumption, where chicken industy has relentlessly increased consumption and stayed mostly profitable, the pork industry profit seems to come only when we cut cost production. Every consumer survey ever done shows taste, flavour, and eating experience are the main driver of consumer satisfaction and repeat purchasing. Instead, we focused on the stupid White Meat Program that drove us to produce Pork that tasted like cardboard. Is it any wonder bellies, ribs, and shoulders (most fat) now dominate the cut-outs while loins and hams lag in value.
The solution is not using a so-called Duroc; it is using Durocs or whatever breed that has marbling-colour–PH that will deliver the best eating experience. Some so-called Durocs will never deliver the eating experience as they themselves have been bred to be really lean and have no better eating attributes then the synthetic breeds the other White Meat Program spawned.
We need to stop being farmers and become marketers, we need to produce a better eating product that will drive price and demand. Playing only the cost game is why per capita consumption for pork has flatlined for 25 years while total meat consumption has increased. We have lost market share. There is a calculation that if every American ate pork one more time a month that is equivalent to 7 million hogs per year. We as an industry pine for more exports maybe the answer is producing a better tasting product and growing our domestic market.
More hogs in 2021?
Projecting more hogs in 2021 than 2020 – interesting perspective. We don’t agree, liquidation is underway. Sow slaughter since first of year up 7,500 a week from a year ago. Sow herd on June 1st was down nearly 150,000 from Dec 1st. There has been continued liquidation since then, ie. Maxwell Foods and Hitch – they alone are 1% of the U.S. sow herd. We believe higher sow mortality due to the weaker genetics that has been introduced from Europe is also contributing to liquidation as gilt retention has declined. We believe without hesitation the U.S. will have fewer hogs in 2021 compared to 2020. How much less is too early to project as the sow herd continues to liquidate. Financial losses have been significant and continue.
This post was written by Genesus