Mobile Version   Web Version   Add to Safe Sender List   Renew your Subscription to National Hog Farmer From the editors of National Hog Farmer Magazine
National Hog Farmer Weekly Preview
October 25, 2010
 
In this issue:
  Why Hog Slaughter Weights, Rates are Climbing
  My How Quickly Things Can Change
  GIPSA Rule Threatens Over 100,000 Jobs
  Congressman Pressures USDA to Reconsider GIPSA Study

MARKET PREVIEW
Why Hog Slaughter Weights, Rates are Climbing
One of my major concerns all summer was what was going to happen to the flow of pigs from farm to harvest when new-crop corn became available this fall. The past few weeks have validated those concerns as slaughter rates and weights have risen sharply.

The question now is just the opposite of last summer. Recall that in July we were asking whether hogs were backed up or were they simply not out there to the degree indicated by USDA’s March and June Hogs and Pigs reports? Now we are asking, “Are the hogs being pulled forward or did USDA undercount inventories on Sept. 1?”

Let’s look at the data. Figure 1 shows that weekly slaughter exceeded the year-ago level last week for the first time since July 17, marking only the sixth time that has happened this year. It also marks the third straight week that slaughter has been above the level suggested by the September Hogs and Pigs Report. The difference between “actual” and “predicted” weekly slaughter has grown sharply over that three-week period with last week’s deviation amounting to 87,000 head.

FULL ARTICLE

FINANCIAL PREVIEW
My How Quickly Things Can Change
Just a month ago, I wrote about producers were finally having a nice six-month run of profits. The USDA’s Hogs and Pigs report came in at about what the trade expected, so things were looking positive for the pork industry going in to 2011. On Friday Oct. 8, when USDA reported that the U.S. corn crop would only average 155.8 bu./acre, the world changed for any pork producer reliant on buying the corn they needed. Since then, the price of corn has shot up over $1/bu. and other feed ingredients have followed. Producers’ breakevens that were $135-140/market hog are now at $145-150/market hog (over $75/carcass cwt.). This happened in a short span of about 72 hours of trading. The cash market has dropped over $20/head since I wrote last month’s column, adding more agony. Unfortunately, some producers will lose money in October. U.S. pork producers are far from being in a position to handle a period of losses again.

There Were Opportunities to Lock Up Margins – I don’t remember how many times I have written articles stressing margin management, but I’ll say it again – “It is critical for every pork producer to manage their margins.” Figure 1 illustrates some of the opportunities that were available over the last six months to lock up profits for a considerable period of time. The chart shows the average profit-per-head potential from the end of March until last week. You can see there were opportunities to lock up over $20/head profit for a year. This is based on locking up the price for your hogs and your feed – the crush margin. Of course, these are averages and there are many factors that play into the data in this chart, but the point is there were opportunities for pork producers to lock up good profits for a period of time. The chart was provided by Pat Von Tersch, Professional Ag Marketing, and I appreciate him putting the chart together.

FULL ARTICLE

LEGISLATIVE PREVIEW
GIPSA Rule Threatens Over 100,000 Jobs
The proposed Grain Inspection and Packers and Stockyards Administration (GIPSA) rule would cost the economy an estimated 104,000 jobs, including 21,274 livestock producer jobs, according to a study conducted by New York-based John Dunham and Associates. The study found that the disruption and resulting inefficiencies in the market should the proposed rule be implemented would increase retail meat prices by 3.33% at a national level, causing a 1.65% decrease in consumer demand for “potentially lower quality” meat and products. The loss of jobs would reduce national gross domestic product (GDP) by $14 billion and would cost a total of $1.36 billion in lost revenues to the federal, state and local governments. The American Meat Institute (AMI), which commissioned the study, stated, “At a time of record unemployment, slow economic recovery and rising poverty levels, it is unfathomable that the administration would propose a rule that could cost one American job, let alone 104,000. As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy.” The complete study can be found at www.MeatFuelsAmerica.com/GIPSA.

FULL ARTICLE

NEWS FLASH
Congressman Pressures USDA to Reconsider GIPSA Study
Rep. Ike Skelton (R-MO) has asked the U.S. Department of Agriculture (USDA) to reconsider conducting a comprehensive economic study of the Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed livestock procurement rule.

USDA’s recent denial of a request by more than one-quarter of the House of Representatives was deemed inadequate.

“While I appreciate receiving the department’s prompt response, the correspondence does not adequately address our primary request to USDA. Rather, it indicates that the department has already conducted, in its view, a sufficient cost-benefit analysis…” Skelton wrote in a letter to Agriculture Secretary Tom Vilsack.

FULL ARTICLE

PORK INDUSTRY CALENDAR
Oct. 26, 2010: Workforce Development Conference on Socially Responsible Pork Production, Country Inn & Suites
Mankato, MN
for more information contact: Trudy Wastweet, Minnesota Pork Board, (800) 537-7675, trudy@mnpork.com or go to www.mnpork.com/producers.

Nov. 4-5, 2010: : Iowa State University Swine Disease Conference for Swine Practitioners, Scheman Building, Iowa State University
Ames, IA
for more information contact:Julie Kieffer at kiefferj@iastate.edu or(515) 956-3201.



FULL ARTICLE
advertisement

 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.

advertisement

 MAGAZINE HIGHLIGHTS

NPPC conducts public-policy outreach on behalf of its 43 state associations, enhancing opportunities for the success of U.S. pork producers and stakeholders by establishing the pork industry as a consistent and responsible supplier of high-quality pork to domestic and world markets. Click here to learn more and support your industry.



 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.

 SUBSCRIBER TOOLS

Change E-mail   Unsubscribe
     
Web Version   Archive
     
advertisement
Social Networking For Pork Industry Professionals National Hog Farmer content is available on Facebook, a social networking tool increasingly used by pork industry professionals. Interact with readers and editors, participate in discussions and keep up-to-date with industry happenings. Become a fan of National Hog Farmer!
National Hog Farmer is also on Twitter, a micro-blogging site that provides brief status updates on people, groups or organizations. Users can "follow" people or groups, including news organizations that they want to keep up-to-date with. Follow National Hog Farmer on Twitter!
advertisement
FOR ROBUST RESULTS, GO TO THE SOURCE.
Our breeding technology is delivering what your operation demands, high production results across a wide range of environmental conditions. Count on the industry leader. Go to the trusted source. Click here for more information.

About This Newsletter