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National Hog Farmer Weekly Preview
July 19, 2010
 
In this issue:
  Pork’s Value Holds Strong
  Pork Exports Continue Near-Record Pace
  Trade Agreement Delays Could Prove Costly
  Industry Groups Push To End Ethanol Subsidies

MARKET PREVIEW
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

PORK EXPORT PREVIEW
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

LEGISLATIVE PREVIEW
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

NEWS FLASH
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

PORK INDUSTRY CALENDAR
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.


 BLUEPRINT

As positive margins return to pork producers’ ledgers, owners and managers are recounting the hard lessons learned as they redouble efforts to improve risk management skills, measure and manage production variance with greater precision, and produce quality pork in a safe and sustainable manner. At the heart of the 50th edition in the Blueprint series, published April 15th, 2010, is a focus on new and improved pathways to profitability.

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 MAGAZINE HIGHLIGHTS

The July 15 edition of National Hog Farmer features 10 “practical, common sense” new products that found favor with our independent review panel. Four industry experts – a pork producer, a swine veterinarian, a swine nutritionist and an Extension agricultural engineer – reviewed 19 new products nominated and introduced at the 2010 World Pork Expo in Des Moines. To read the full story, go to: http://nationalhogfarmer.com/mag/wpx2010-new-product-tour-0715/.

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According to a head-to-head trial1, LINCOMIX® (lincomycin) is equally as efficacious for ileitis control at 40 g/T as Tylan® is at 100 g/T. That means you’ll spend a whopping 40% less for comparable results. Contact your veterinarian or your Pfizer Animal Health representative to learn more.
1. Data on file, Study Report No. 768-9690-0-CPC-97-002, Pfizer Inc.

 POSTERS

FREE SELECTION GUIDES AND MANAGEMENT POSTERS
National Hog Farmer offers 10 posters targeting key production areas, offering guidance in critical areas such as feet and leg soundness and reproduction traits soundness in replacement gilts. Others include pig anatomy, heat detection, sow condition, etc. All posters are in English. Select posters are translated to Spanish, Chinese and Japanese.

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NPPC and the National Pork Board have launched a program, We Care, to promote pork producers' commitment to responsible pork production. From animal care and the environment to food safety and quality, pork producers demonstrate best practices daily. For more on continuing the tradition of doing what’s right, click here to learn more.

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