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Pork’s
Value Holds Strong
On several occasions, I have written that this year’s
prices have been significantly higher than supply levels have justified.
Instead of the usual -2 to -4 price:quantity multiplier – what we
economists call price flexibility – the relationship has been -6 and
-8 and, sometimes, even -10 this spring. This means that a 1% decline in
pork supply has driven, at times, a 6% or more increase in the cutout
value and hog prices.
There are a couple of reasons for these excellent results that are
beyond the direct impact of pork demand. First, the 2009 price to which
we are comparing was unusually (and perhaps artificially) low last
spring and summer due to H1N1 influenza concerns and some supply issues
– more hogs than expected and much higher weights than expected.
Second, sharply higher prices for chicken and beef this spring supported
pork cutout values significantly as retailers and, to a lesser extent,
foodservice operators looked for a better value in protein items and
ingredients. While those forces are always in play, they were in force
in spades this spring.
FULL ARTICLE
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Pork
Exports Continue Near-Record Pace
U.S. pork exports maintained their solid performance in
May, continuing on a pace to set a new annual record for the value of
exports, on a “per-head-slaughtered basis,” and achieve the
second-highest annual total value of pork exports – even though
industry-wide production is down for the year.
In May, the United States exported nearly 28% of total pork (pork plus
pork variety meat) production. Over the first five months of 2010, just
over 24% of total production was exported, putting the industry roughly
on track for the record year of 2008, when the United States exported
24.4% of all pork.
For producers, the positive news is that the export value per animal
processed in May was an impressive $53.10 – nearly 30% higher than the
$40.90/head value recorded in May 2009. While it may not be realistic to
maintain that price level, it is very possible that the average export
value per animal in 2010 will exceed $45/head, easily surpassing the
record of $42.30 set in 2008 and the $38.44/head total recorded last
year.
FULL ARTICLE
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Trade
Agreement Delays Could Prove Costly
A number of agricultural and producer organizations have
written the congressional leadership urging Congress to move forward on
the pending free trade agreements (FTA) with Korea, Colombia, and
Panama. The group indicated that the U.S.-Korea FTA would expand
exports for U.S. commodities and result in $1.8 billion in additional
sales – a 46% increase. Congress was also reminded that competitors
of U.S. goods are actively pursuing these markets. Canada completed its
FTA with Columbia last month which, consequently, could mean the U.S.
share of the Colombian wheat import market could fall from around 70%
down to as low as 30%. The U.S. market share for feedgrains has dropped
sharply from 96% in 2007 to 38% in 2009. The American Meat Institute
estimates that the U.S. meat industry will lose $127 million in exports
as a result of the Canadian FTA with Colombia. Organizations signing
the letter included the American Farm Bureau Federation, American Meat
Institute, American Soybean Association, National Association of Wheat
Growers, National Cattlemen’s Beef Association, National Corn Growers
Association, National Council of Farmer Cooperatives, National Grange,
National Milk Producers Federation, National Turkey Federation and the
Pet Food Institute.
Biofuels Incentives Update— At the request of Senator Jeff
Bingaman, chairman of the Senate Energy and Natural Resources Committee,
the Congressional Budget Office (CBO) has assessed the cost of various
biofuels tax credits against their energy security and environmental
benefits. CBO estimated the blender’s tax credit for ethanol will cost
$7.6 billion this year. The report also concluded that, “After
adjustments for the different energy contents of the various biofuels
and the petroleum fuel used to produce them, producers of ethanol made
from corn receive 73 cents to provide an amount of biofuels with the
energy equivalent to that in one gallon gasoline.” Senator Bingaman
noted, “Corn-based ethanol plays an important role in our nation’s
transportation fuel mix. Thanks in part to corn-based ethanol, U.S. oil
import dependence peaked in 2007, and is expected to decline further
until 2035. But corn-based ethanol is now a mature technology whose
market share is protected by an aggressive Renewable Fuel Standard. And
ethanol prices are currently well below gasoline prices, making it even
harder to justify the existing subsidy.” The ethanol blender’s tax
credit expires Dec. 31, 2010.
FULL ARTICLE
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Industry
Groups Push To End Ethanol Subsidies
In a letter Friday, the nation’s largest livestock and
poultry trade associations called for the Senate to allow a 30-year-old
tax credit and a protective tariff for the ethanol industry to expire on
time at the end of the year.
Signing the letter were the American Meat Institute, the National Pork
Producers Council, the National Turkey Federation, the National Chicken
Council, the National Cattlemen’s Beef Association and the National
Meat Association.
“Although we support the need to advance renewable and alternative
sources of energy, we strongly believe it is time that the mature
corn-based ethanol industry operates on a level playing field with other
commodities that rely on corn as their major input,” the groups said
in its letter. “Favoring one segment of agriculture at the expense of
another does not benefit agriculture as a whole or the consumers who
ultimately purchase our products.”
FULL ARTICLE
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July 18-21, 2010: 21st International Pig
Veterinary Society Congress, Vancouver Convention and Exhibition Centre,
Vancouver, British Columbia, Canada;
For more information
contact: (604) 688-9655 ext. 2 or ipvs2010@advance-group.com
or go to http://www.ipvs2010.com/.
August 31, 2010: 20th Annual Carthage Veterinary
Service, Ltd. Swine Conference, Western Illinois University
Macomb,
IL
For more information contact: (217) 357-2811 or go to www.hogvet.com.
FULL ARTICLE
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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
industry — click here
to learn more.
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BLUEPRINT
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MAGAZINE HIGHLIGHTS
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1. Data on file, Study Report No. 768-9690-0-CPC-97-002, Pfizer
Inc.
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