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Trends in Pig Crop Report Bear Watching
USDA’s quarterly Hogs and Pigs report, released last Friday, contained no big surprises, although there were a couple of definite trends that may impact hog and pork markets in the weeks and months to come. The report is being viewed as slightly bearish for nearby futures contracts and slightly bullish for deferred futures contracts in today’s trading. The national data in the report appear in Figure 1.
As I expected, the report looks very much like one year ago, with all of the inventory numbers at or just above last year’s levels. The breeding herd, at 5.788 million head, is 0.5% larger than last year’s level, which, you might recall, was the smallest U.S. breeding herd on record. The March 1 herd was 10,000 head larger than the Dec. 1 herd, an indication of some continued rebuilding of the herd.
The market herd was 0.6% larger than one year ago at 58.176 million head. The increase was led by the 50- to 119-lb. category, up 1.5% from 2010. USDA’s estimate of the 180-lb. and over inventory at 100% of last year looks a bit high relative to March slaughter, which was down 1.2% through Friday. This report comes relatively early in the month, however, which means that a larger-than-usual portion of these 180 lb. and heavier pigs remain to be slaughtered. The discrepancy is a bit high, but not big enough to raise questions about the report.
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Managing Volatility is Like Keeping Weight Off
Twenty-six years ago, I weighed about 250 lb. I always joke that I had “sympathetic pregnancies” with my wife when she was pregnant with each of our two children. I’d start at 185 lb. and plump up to 250 lb.! It took me three years to lose over 70 lb. Of course, the older I get, the harder it is to keep the weight off. I told someone last week that I think my weight is like the corn market. I have to exercise like crazy for three days to lose a couple of pounds, and if I take a day off and go out for dinner, I can easily gain 5 lb. in a day.
Anybody involved in the swine industry and trying to manage margins can relate to this analogy. The amount of volatility is unprecedented and it is a challenge. It seems every day there are wide swings in all commodities that affect potential profits for pork producers – and that makes decision making difficult. In the past 30 days, the amount of margin calls that producers have had to send to their brokers would wear on anyone. Like trying to keep weight off, the main thing is to stick to a plan and execute.
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China Trade Barriers Cost U.S. Agriculture
The International Trade Commission (ITC) says that billions of dollars in U.S. trade with China is limited or lost due to export restrictions created by tariffs, tariff-rate quotas (TRQs), and non-tariff trade barriers (sanitary and phytosanitary). The report said, “Results suggest that the elimination of Chinese tariffs and non-tariff measures could lead to an additional $3.9 billion to $5.2 billion in U.S. agricultural exports to China.” According to the report, Chinese tariffs and TRQs reduced U.S. agricultural exports by approximately $2.1 billion in 2009, while non-tariff trade barriers reduced U.S. agricultural exports by $2.6 billion to $3.1 billion in 2009. Pork, wheat and cotton are hurt the most by the non-tariff barriers. According to the report, China imposes non-tariff barriers that effectively prohibit imports of certain products, such as U.S. beef, strawberries, fresh potatoes, and significantly restrict imports of other U.S. products, such as pork and apples. China is now the second-largest export market for U.S. agriculture, representing 14% of all U.S. agricultural exports. The report was requested by the Senate Finance Committee.
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Manitoba Pledges Sow Stall Phase-Out by 2025
A new roadmap for the future of Manitoba’s pork industry will include major and possibly expensive changes as the Canadian province promises to eliminate sow gestation stalls within the next 15 years.
“Manitoba Pork commits to encouraging producers to phase out by 2025 the style of dry sow stalls currently used. New forms of housing must be practical and provide protection to animals and humans alike,” states a document called Embracing a Sustainable Future.
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March 30 & 31, 2011: London Swine Conference, London Convention Centre, London, Ontario, Canada. Please check our official website www.boarsemen2011.com for further information and don't hesitate to contact us if you should have further questions.
April 11-14, 2011: The 2011 Annual Conference of the National Institute for Animal Agriculture (NIAA) will be held at the Omni San Antonio Hotel in San Antonio, TX.
The conference will explore the growing necessity of involving consumers as stakeholders in food production. Topics include the food supply; food security; food safety; animal agriculture’s importance in the ecosystem; and effective ways to communicate with consumer stakeholders. A schedule of events, registration and hotel information is available at the NIAA website: www.animalagriculture.org, or call NIAA at (719) 538-8843 for additional information.
May 22-25, 2011: Alltech’s International Animal Health and Nutrition Industry Symposium, Lexington Convention Center, Lexington, KY. For more information contact: www.alltech.com/symposium.
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