Pork Commentary
By Jim Long President – CEO Genesus Inc.
The Iowa – Minnesota lean hog prices held steady last week with Friday’s average $61.99. This despite a jump of 150,000 head in weekly marketing’s compared to the week before. In our opinion this was a catch up from the marketing’s held back from the bad weather the previous week.
Other Observations
v The latest Iowa – Minnesota live weights we have shows 268.5 pounds for the week. A year ago the same week was 268.3 pounds. A couple of months ago we were running 5.1 pounds over a year ago. In our opinion, the narrowing of year over year weights reflects current marketing’s. We expect weights will stay close to a year ago for the foreseeable future as year over year hog marketing’s drop through 2010.
v Reports in some regions of mould and mycotoxins in corn caused by late maturation of the crop and high rainfall will in our opinion slow growth rates and affect breeding performance. We don’t want to make a huge deal about this but if it affects supply 1% it is still hog price supportive.
v Lots of stories coming out of the southern Minnesota – Iowa region of hot breaks of PRRS. We do not think for this region this is unique in itself, but for the individual producers who it hits, it is further financial losses on top of the last two years. It also reaffirms the scourge of PRRS and one of the reasons in the swine genetic business PRRS free breeding stock has become a necessity. Also, it continues to point to the advantage to have early wean sow units outside the heavy PRRS zone whether it be in the United States or Canada to feed the finishing complexes and packing plants of the Iowa – Minnesota region.
v Official U.S.A. pork exports statistics are indicating historically robust pork movement. Japan and Mexico are leading the way. A low U.S. dollar relative to many global currencies coupled with U.S. hog market prices lower than most other importing countries is pushing and pulling pork to other countries. In our opinion, this will continue through 2010 as U.S. and Canadian pork supplies decline – a big trigger for higher U.S. hog prices.
v We had some Russian producers visit us last week. The market price in Russia for hogs has declined from $1.40 U.S. live weight a pound to $1.20 U.S. live weight per pound. Though not as good as it has been, the producers were glad to report they are still making money. Russia is supplying only about 60% of its own pork needs from domestic production. There is a Russian Government plan to invest $3 billion U.S. in swine production over the next few years to try to get to domestic pork self sufficiency. It will take a long time to reach this goal in our opinion. As Russian domestic production increases, swine prices will fall and this in turn will stimulate domestic per capita pork consumption and make the goal of self sufficiency farther away.
v The Canadian Government financial program to retire swine production facilities for three years announced last week 66,000 sows of capacity have been accepted. This should further cut the supply of hogs in Canada. One question we don’t know the answer to is how many of these facilities were already empty? Further Government monies have been allocated for barn retirement which indicates to us further liquidation. In our opinion, few swine barns will have much use after they sit empty for three years. Deterioration of buildings and equipment will be severe. Accepting this Government money for most is a barn retirement program.
Disney World
My wife and I took our boys to Disney World for a few days over the weekend. This really does not have much to do with hogs but a fascinating experience.
Disney is a machine. 10’s of thousands of people fed, watered, and entertained. No small detail is missed. Clean, organized, and disciplined – a testament to a business philosophy that demands customer service. The place is immaculate. Even the executives wandering the park carried sticks to pick up garbage. This is a classic case where the customer is at the top of the pyramid.
The global financial media seems to always want to write off America. A financial crisis and the supremacy of the U.S. economy are questioned. Take them to Disney. No country is falling behind when it has the talent and ability to execute such a marvel. Disney has 58,000 employees in Orlando. They are trained in excellence.
On the way to the Orlando airport our taxi driver was telling us about the financial crisis. Well, an economic financial crisis is relative. We have travelled to many countries in the world and if what we saw in Orlando was the worst, the world would be thankful.
Disney gave us a take home message. Demand excellence in everything we do, don’t accept compromises in quality. People want to work with an excellent company and product. Most of all, customers are first, second, third, in importance, look after the customer, nothing else really matters.
Happy Holidays!
We wish you all a Merry Christmas and a Happy New Year! We believe 2010 will be a lot better year for hog producers than 2009. We still see scenarios that lead to 90 cent hogs next summer.
Categorised in: Pork Commentary
This post was written by Genesus