the Strength in the Hog Market
Is it demand or is it supply? That is the big question
regarding the continued rally of cutout values and hog prices over
recent weeks. Regardless of the driver, the resounding consensus from
producers is: “We’ll take it!” In recent weeks, there have been
some hogs – primarily purchased as feeder pigs – sold at a profit.
It’s about time.
Figure 1 shows weekly data for national negotiated weighted average (WA)
net prices and the fourth quarter rally is quite obvious. There have
been Q4 rallies before, most notably in 2004, when cash prices bumped
$80 in early December. But that rally died a sudden death with prices
dropping to the low $60s by year’s end.
This one, on the other hand, gained strength in December and last week
drove prices to $65.28/cwt. carcass, the highest level since Oct. 9,
2008. Now, negotiated prices are the most volatile of the prices
reported by USDA and they represent a smaller and smaller percentage of
total supplies (more on that next week). But the national WA net price
for all purchase methods (Figure 2) has shown the same kind of strength,
especially in the first two weeks of the New Year. The only reason the
rally of the total WA price was not as dramatic as the rally for
negotiated WA prices is that the total price did not get nearly as low
as the negotiated price last summer – a fact owing to relatively high
prices paid for hog that were priced off of feed or cost matrixes of
Chicago Mercantile Exchange (CME) Lean Hogs futures.
Links to Litter Size
As we enter our second year of writing these benchmarking
articles, we invite you to suggest topics you’d like to see us
address. The focus for this article came from a telephone conversation
we had last week with one of our clients.
The two charts (attached) are very cluttered, but they reinforce one of
the problems encountered when analyzing data. Averages are nice to look
at, but it is the variation that challenges the day-to -day management
of a farm.
Twenty-six senators have written Secretary of Agriculture
Tom Vilsack and U.S. Trade Representative Ron Kirk to state their strong
support for implementation of country-of-origin labeling (COOL). They
commended the administration for its efforts regarding the World Trade
Organization complaint filed by Canada and Mexico. The senators said,
“We believe that, in a manner consistent with General Agreement on
Tariffs and Trade (GATT) obligations, the COOL program as signed into
law in the 2008 Farm Bill is nondiscriminatory in its treatment of
imported goods, mandating that both domestic and imported goods covered
under the law be labeled with country of origin.” Those signing the
letter were Senators Tim Johnson (D-SD), Mike Enzi (R-WY), John Barrasso
(R-WY), Max Baucus (D-MT), Sherrod Brown (D-OH), Susan Collins (R-ME),
Kent Conrad (D-ND), Byron Dorgan (D-ND), Russ Feingold (D-WI), Diane
Feinstein (D-CA), Al Franken (D-MN), Tom Harkin (D-IA), Amy Klobuchar
(D-MN), Herb Kohl (D-WI), Mary Landrieu (D-LA), Carl Levin (D-MI),
Claire McCaskill (D-MO), Jeff Merkley (D-OR), Lisa Murkowski (R-AK), Ben
Nelson (D-NE), Richard Shelby (D-AL), Olympia Snowe (R-ME), John Tester
(D-MT), John Thune (R-SD), David Vitter (R-LA) and Ron Wyden
Objects to Mandatory COOL
Mandatory country-of-origin labeling (COOL) violates the
United States’ international trade obligations that must be honored,
the American Meat Institute (AMI) told the Office of the U.S. Trade
Representative on Friday (Jan. 8).
AMI’s comments were in response to a Dec. 4, 2009 Federal
Register notice. In late 2009, Canada and Mexico filed a case
against the United States with the World Trade Organization (WTO),
affirming their earlier outspoken opposition to the labeling law when
it was being considered by Congress.
AMI Senior Vice President of Regulatory Affairs and General Counsel
Mark Dopp says that equitable enforcement of international trade rules
is a high priority for all parties, and that all too often, market
access for U.S. meat products has been threatened or cut off with little
or no legal reason.
Jan. 10-13, 2010: American Farm Bureau
Federation Convention and Annual Meeting, Washington State Convention &
Trade Center, Seattle, WA; contact: (202) 406-3600 or www.fb.org.
Jan. 15-16, 2010: The 13th Annual Ag Link conference
program is being offered in Ames, IA. Two, 2-day programs, sponsored by
Iowa State University's Beginning Farmer Center and Iowa State
University Extension, are being offered for families involved in a
multiple generation farm business.
Jan. 19-22, 2010: Banff Pork Seminar, Banff,
Alberta, Canada; contact: http://www.banffpork.ca/prog.
U.S. pork producers must be able to compete in foreign markets
without restrictive tariffs or sanitary barriers to trade. NPPC’s
mission of gaining and expanding access to markets through free trade
agreements is paramount to the continued success of the U.S. pork
here to learn more.
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