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September 14, 2007 A Penton Media Property



Table Of Contents
Crop Reports Offer Hope
Lactation Feed Intake is Critical
Farm Bill Livestock Competition



What's new on National Hog Farmer?
- News: United Kingdom Confirms New Outbreak of FMD
- U.S. Pork Center Adds Feature
- Exercise Improves Bone Density
- Pen Gestation Isn't Complicated

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Market Preview
Crop Reports Offer Hope
The focus of most of U.S. agriculture this week was the monthly USDA Crop Production Report released on Wednesday. Some of the highlights were:
  • An even larger record corn crop than USDA had predicted in June. USDA has now pegged this year's crop at 13.308 billion bushels, up from the 13.1 billion predicted by the June report. That breaks the old record of 11.8 billion bushels set in 2004.

  • The second highest national average yield on record at 155.8 bu./acre. This is 5.8 bu. above the 1980-2006 trend yield and 1.7 bu. above the 1996-2006 trend yield. That latter period covers the advent of genetically engineered corn varieties, but does not include any years with widespread adverse weather conditions. The longer trend period includes some very tough weather years (1983, 1988, 1993) and the impact of genetically modified crops.

  • Some slight, but interesting, changes in projected usage. USDA increased projected feed and residual by 100 million bushels (to 5.85 billion), reduced projected ethanol usage by 100 million bushels (to 3.3 billion) and increased projected corn exports by 100 million bushels (to 2.25 billion).

  • The combination of higher output and slightly higher usage is projected to leave 1.675 billion bushels of corn in storage at the end of the '07-'08 crop year. That is up from last month's projection of 1.516 billion bushels and last year's 1.142 billion.

  • USDA left its predicted range for the national average farm price of corn at $2.80 to $3.40/bu. even though the projected ratio of carryout stocks to total usage increased by roughly 1% (see Figure 1). USDA's price forecast still reflects a significant increase in corn demand.

  • The projected soybean crop was reduced slightly, from 2.625 billion bushels to 2.619 billion. After some adjustments to projected crush and exports, year-end stocks were lowered slightly and USDA's projected soybean price was increased to $7.35 to $8.35/bu., 10 cents higher per bushel at both ends. Forecast soybean meal prices were increased to $205 to $235/ton, $5 higher than they were in June.

Figure 2 shows my index of hog feed costs as of the close of Chicago Board of Trade (CBOT) grain futures trading on Thursday. This graph represents the cost of the corn and soybean meal to make a 16% crude protein hog diet. The blue line is actual cost based on cash corn (Omaha) and soybean meal (Decatur, IL) prices. The other lines are forecasts based on CBOT futures prices on the dates shown.

Forecast feed costs for the remainder of 2007 and the first part of 2008 have dropped significantly since mid-June, when futures prices were high before we knew whether this year's crops would receive enough rain. The $18 to $20/ton reduction drove costs for this period down by roughly $3/cwt. of live hog produced.

But the green line labeled "Sept. 13, 2007" also clearly shows the challenges that lay ahead. The feed cost index increases by roughly $16/ton by June as corn and soybean meal futures reflect the marketplace competition for crop acres next year.

And let us not forget that ethanol production capacity is still growing at a rapid clip. The latest count by ISU's Center for Agriculture and Rural Development (CARD) shows that there are still 77 new plants under construction and eight plants that are being expanded. When completed, these plants will add the capacity for 6.65 billion gallons of ethanol to our current capacity of 6.7 billion gallons. That means that the annual rate of corn usage for ethanol will double by the end of 2008.

It is nice to have more affordable feed for now, but we have only dodged one bullet so far.

Pork Exports Down, But Prices Are Up
July's pork export data was a bit more encouraging than that of the previous few months. July exports were 2.4% larger than one year ago -- the first positive month since January. The growth was provided by Canada, China-Hong Kong (up 227% from July 2006, which was supposedly before the big China purchases) and Russia.

Shipments to Japan were 2.2% smaller than in July 2006 and shipments to Mexico continued to be dismal -- though less dismal than in recent months at -24.7%.

Total 2007 U.S. pork exports through July are now only 2.8% below last year on a carcass weight basis, 4.9% on an actual product weight basis. The value of those exports, though, is still nearly 5% higher than last year, and I would argue that this is the most important figure when it comes to exports' contribution to U.S. pork and hog demand.

So the news is better and I still have hopes that we will set our 16th straight record for pork exports. Much of that will depend on China.

The futures markets still appear to have significant China business built into prices since expected supplies and hog demand steady with 2006 do not provide forecast prices nearly as high as current futures prices. The deferred contracts are all nearing contract life highs, so I think Chicago Mercantile Exchange (CME) Lean Hogs futures are still providing some good pricing opportunities for producers.




Click to view graph.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com



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Advancement in PRRS Research Award.
Boehringer Ingelheim is awarding $75,000 annually to fund three research proposals to help solve the PRRS mystery. Entries due January 1, 2008. Visit www.PRRSresearch.com

Production Preview
Lactation Feed Intake is Critical
Measures to improve longevity of breeding females have been accorded a high priority in swine breeding herds. Although a sow may be removed from the herd at any time during its reproductive cycle, from an epidemiological standpoint, lactation is a high-risk event.

A great deal of the challenge to longevity is related to ensuring adequate feed consumption during lactation. The nutritional demands on modern, highly prolific sows during lactation may not even be met with ad libitum feeding.

The nutritional demands of lactation are further exacerbated in younger parity females as they have the additional requirement to support growth.

Inadequate lactation feed intake may affect sow longevity directly and indirectly. The direct effects may be associated with excessive depletion of body reserves to maintain lactation, while the indirect effects are mediated by conditions that impair breeding performance.

Studies have indicated that highly productive sows may have physical limitations in consuming the quantity of feed required to replenish the minerals secreted during a heavy lactation. This may make them more prone to conditions such as osteomalacia, which can lead to lameness and removal from the herd.

Similarly, there is research evidence that a low level of feed intake adversely affects vital reproductive performance indicators, such as wean-to-estrus interval and embryo survival rate, during lactation.

Since reproductive efficiency is a prerequisite for retaining sows in the breeding herd, any factor leading to a compromise in the sow's reproductive performance can impair her longevity in the herd. Arguably, a shorter lactation length means less body weight loss and less exposure to higher nutrient demands in the short term. However, it also means that sows with short lactation periods farrow more litters in the same time frame and will have a greater metabolic demand.

Epidemiological evidence has linked shorter lactation length with high risk of removal. When the length of lactation is short, the diet therefore must ensure that milk production demands are fulfilled and postweaning breeding performance remains unaffected.

A glance at the research literature on lactation feeding reveals two interesting points. First, though inadequate lactation feed intake is linked to inefficient reproduction and consequential sow removals, only a few studies have evaluated the direct relationship between lactation feeding and sow longevity. Secondly, the most predominant dimension of lactation feed intake used in research has been the average quantity consumed during the entire lactation.

Efforts to improve any production scenario must focus on the low extremes. Translating this to lactation feed intake, producers should focus on those sows consuming significantly lower quantities of feed during any lactation day. The scientific proposition that there are points during lactation when the physiological mechanisms controlling reproduction are more sensitive to reduction in feed intake, such as estrus after weaning, supports this argument.

A study at the University of Minnesota analyzed the direct link between lactation feed intake and sow longevity. This research demonstrates that sows consuming < 7.7 lb. of feed/day during the first two weeks of lactation had a higher likelihood of removal from the herd before the next parity. The likelihood of removal was the highest (odds ratio 2.36, confidence interval 1.311- 4.261) for sows that consumed no feed in any one day during the first two weeks of lactation compared to the rest of the population.

Factors affecting lactation feed intake include parity, litter size, pregnancy weight gain, mean room temperature, particle size and digestibility of the feed, availability of ad libitum water, frequency of feeding and feeder design. All of these parameters need to be properly addressed to ensure adequate lactation feed intake.

It goes without saying, we cannot force a sow to eat if she does not want to, but we can always look for options to prevent that from happening. The strategies to achieve this may include early detection of diseases and other conditions, and providing an environment conducive to feed consumption during lactation.

by Sukumarannair S. Anil, DVM
sukum001@umn.edu Editor's Note: For all your agricultural news, markets and commentaries, go to www.farms.com.



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Legislative Preview
Farm Bill Livestock Competition
The National Farmers Union and other organizations are urging the Senate Agriculture Committee to include a "strong" livestock competition title in the farm bill. Provisions being requested include:
  • Give producers at least three days to review and cancel a contract.

  • Protect producers from prematurely terminated contracts if they have made a sizable capital investment.

  • Make poultry producers and processors subject to the authority of the Packers & Stockyards Act (PSA).

  • Require courts to award attorneys fees to successful producer plaintiffs under PSA.

  • Prohibit the use of mandatory arbitration clauses in contracts between meat processors and livestock producers.

Payment Limitations -- Senator Tom Harkin (D-IA), chairman of the Senate Agriculture Committee, has proposed a limit of $250,000 per farm household on commodity payments. Under the proposal, payment limitations would be restricted for a farm household to $50,000 in direct payments, $50,000 in countercyclical payments and $150,000 in marketing loan gains. No household could receive more than $250,000 in total payments. Under the proposal, a husband and wife will be considered as one individual, "unless prior to marriage, each spouse was engaged in unrelated farming operations and, after marriage, the farming operations remain separate." Senator Harkin proposes that a married couple filing a joint tax return showing an average adjusted gross income of $500,000 over the last three years or a single person with a three-year adjusted gross income of $250,000 would not be eligible for commodity payments. The House of Representatives passed farm bill prohibits payments to individuals with more than $1 million in adjusted gross income. Last month, Senators Byron Dorgan (D-ND) and Chuck Grassley (R-IA) sent a letter to members of the Senate urging them to support their payment limitations proposal. The Dorgan-Grassley proposal would limit annual per farm commodity subsidy payments to $250,000, end the "three entity" rule, and ensure that payments go to people actually engaged in farming. In the letter, the Senators said, "The current payment limits promote farm consolidation, artificially increase land prices, and create barriers for a new generation of farmers eager to enter the industry. By allowing this to continue, we are wasting taxpayer dollars, abusing the public's trust, and undermining the very farm safety net that our family farmers depend on to survive."

Farm Bill -- Agricultural Tax Package -- Senate Finance Committee Chairman Max Baucus (D-MT) this week outlined his goals for the Senate Finance Committee to provide $8 to $10 billion for farm bill programs in the form of a trust fund for agricultural disasters, bonds and tax credits. The Senate Finance Committee will consider this package later this month. The package would provide:
  • Permanent Agriculture Disaster Relief Trust Fund -- Provide an ongoing program to offset farming income losses not covered by crop insurance program.

  • Conservation Tax Credits -- Participants in the Wetlands Reserve Program, the Grassland Reserve Program and the Farm and Ranchlands Protection Program currently receive cash payments for enrolling in these programs. The proposal would allow participants to receive tax credits instead.

  • Conservation Reserve Program (CRP) -- Would clarify that CRP payments made to certain farmers participating in mandatory conservation activities are rental income and not subject to self-employment taxes.

  • Rural Development Bonds -- Creates a new category of tax credit bonds for projects such as rural electric and telemedicine, rural broadband and other rural economic development community projects.

  • Energy Conservation Tax Incentives -- Includes tax incentives for wind and other forms of alternative energy.
Many hope that this package will help move the farm bill forward in the Senate.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.



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Pork Industry Calendar
Sept. 15-19, 2007--International Symposium on Air Quality and Waste Management for Agriculture, Omni Interlocken Resort, Broomfield, CO; contact: American Society of Agricultural and Biological Engineers, Sharon McKnight by phone (269) 428-6333, fax (269) 429-3852 or e-mail mcknight@asabe.org or visit http://www.asabe.org.

Sept. 15-18, 2007: Leman Swine Conference, RiverCentre, St. Paul, MN; contact the University of Minnesota by phone (612) 624-3434 or (800) 380-8636, e-mail vop@umn.edu or log onto www.cvm.umn.edu/outreach.

Click here to get National Hog Farmer's complete pork industry calendar.



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