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National Hog Farmer Weekly Preview
August 22, 2011
 
In this issue:
  Domestic Pork Demand Holding Strong
  Market Volatility Abounds
  More Oversight of Antibiotic Use
  Ethanol Takes Lead in Corn Consumption

MARKET PREVIEW
Domestic Pork Demand Holding Strong
As we suspected, June was a very good month for domestic pork demand. With the receipt of USDA’s carcass-weight export data last week, we could complete our computations of the June demand indexes for the various species. All showed improvement over last year. That’s the good news.

The bad news is that demand for all three species was very soft during the first half of 2010 – the basis for the current comparisons. The challenge will be to keep them growing, relative to stronger 2010 months, the rest of this year, but let’s cross that bridge when we come to it. Stronger demand is stronger demand and we need to appreciate it and its impacts.

Figure 1 shows historic demand index data for the three major meat species. The last observation on the chart represents the index for the 12-month period ending in June. I use the lagging 12-month period for that last observation in order to include all of the seasonal (i.e. within a calendar year) variation that may exist in the demands for the respective products. The number obviously changes each month as one month is dropped and another is added. But the 12-month average is, I think, more fair than comparing a partial year’s data to entire years in the past. That comparison could be misleading one direction or the other, depending upon normal demand strength or weakness in a year’s early months.

FULL ARTICLE

FINANCIAL PREVIEW
Market Volatility Abounds
Anyone looking at their 401K accounts during the last couple of weeks has gotten a better idea of what it is like for pork producers trying to manage their risk. As the stock market takes wild swings seemingly every day, the value of 401K accounts have seen some pretty significant drops in value. Although the market has come back some, today’s (Aug. 18) market was down over 400 points. Some of our swine clients have said, “Welcome to my world!” The amount of volatility in all markets is unprecedented. The main reason for the volatility is there is so much uncertainty about the direction the economy is headed. With no real clear path, market volatility seems to be the norm. This past week, as I looked at hog crush margins for the next 12 months, we have lost over $7/head. The main reason for this is the drop in hog futures. As Figure 1 (attached) shows, there is a seasonal tendency for margins to drop after the first week in August.

Feed Supply Tightens
The most recent crop, released last week, predicts a national yield at 153 bu./acre with a projected carryout of 775 million bushels for 2011-12. As Iowa State University Extension Agricultural Economist Bob Wisner points out in Figure 2, we are very tight on our feed supply. There is a fair amount of wheat being fed in the eastern Corn Belt and, for now, that trend will continue. Most producers are currently using multiple feed ingredients to offset a portion of their standard corn/soy diets. Nutritionists are being challenged to balance diets without sacrificing performance and carcass quality. Producers that can do this successfully gain an advantage. At current prices, a 0.05 difference in feed conversion is worth over $1.70/head. With costs so high, every little bit makes a difference.

FULL ARTICLE

LEGISLATIVE PREVIEW
More Oversight of Antibiotic Use
Congresswoman Louise Slaughter (D-NY) is asking the Food & Drug Administration (FDA) for greater oversight of antibiotics used for farm animals. In a letter to FDA, Slaughter and other members are asking the FDA for progress on regulation and guidance under review, “The Judicious Use of Medically Important Antimicrobial Drugs in Food-Producing Animals” and the “Veterinary Feed Directive.” The members said, “It is time to take action to preserve the effectiveness of antibiotics. Every year, nearly two million Americans acquire bacterial infections during their hospital stay, and approximately 100,000 die from them; 70% of these infections are resistant to the drugs commonly used to treat them.” Congresswoman Slaughter has introduced the “Preservation of Antibiotics for Medical Treatment Act” (PAMTA) that would only allow for the use of antibiotics for treatment of animals when sick and not allow their use for growth promotion, prevention and control.



GIPSA Cost-Benefits Analysis Requested – Senator Pat Roberts (R-KS), ranking member of the Senate Agriculture Committee, in a letter to the administrator of the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs, asked him to commit to reviewing USDA’s proposed GIPSA rule on livestock marketing. Senator Roberts wrote, “Unfortunately, despite the rule’s far-reaching implications, neither USDA nor your office examined the costs or benefits of the measure to industry participants, the marketplace or consumers before the rule was proposed. A thorough review of the costs and benefits to all is necessary for the Administration, the Congress and the public to understand the impacts of USDA’s proposal.”

FULL ARTICLE

NEWS FLASH
Ethanol Takes Lead in Corn Consumption
For the first time ever, the amount of corn used to produce ethanol in the coming year will outpace corn used for livestock and poultry production, according to Ron Plain, University of Missouri agricultural economist.

The U.S. Department of Agriculture (USDA) is predicting that the amount of corn used for ethanol production will show a modest increase to 5.1 billion bushels, compared to 4.9 billion bushels of corn for meat and poultry production. Feed usage of a U.S. corn crop hasn’t dropped below 5 billion bushels since the 1996 crop was harvested.

“We have been steadily increasing the amount of corn used for ethanol, which will be up from 5.02 billion bushels of last year’s corn crop,” Plain says.

Government support for ethanol has boosted that industry’s ability to outbid producers for the golden grain, resulting in smaller livestock and poultry production.

But perhaps working in farmer feeders’ favor is that the ethanol blender’s tax credit is due to expire Dec. 31, 2011, and there doesn’t seem to be enough legislative support to extend the credit.

FULL ARTICLE

PORK INDUSTRY CALENDAR
Aug. 30, 2011: Carthage Veterinary Service Ltd. 21st Annual Swine Conference, Western Illinois University, Macomb, IL. For more information contact: http://www.hogvet.com/conf-overview.htm

Sept. 8, 2011: 11th Midwest Swine Nutrition Conference, Indiana Farm Bureau Building, Indianapolis, IN. For more information contact: www.swinenutritionconference.com.

Sept. 17-20, 2011: Allen D. Leman Swine Conference,RiverCentre, St. Paul, MN. For more information contact: http://www.cvm.umn.edu/vetmedce/events/adl.

Sept. 17-18, 2011: Preble County Pork Festival, Preble County Fairgrounds, Eaton, OH. For more information contact: (937) 456-7273 or info@porkfestival.org.

Sept. 20-21, 2011: 72nd Minnesota Nutrition Conference, Holiday Inn, Owatonna, MN. For more information contact:http://www.regonline.com/72MNNutritionConf.

FULL ARTICLE

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 BLUEPRINT

The April 15, 2011 Blueprint edition of National Hog Farmer offers details on creating stable herd health by developing a herd health profile, provides a review of basic immunology and gives details on how to select the right vaccine. The final article looks at efforts by a consortium of swine disease researchers to understand genetic disease resistance. www.nationalhogfarmer.com.

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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.


 MAGAZINE HIGHLIGHTS

The July 15th edition of National Hog Farmer magazine features the 30th annual World Pork Expo New Product Tour. Our expert panel narrowed the field to eight "most promising products" displayed at the expansive trade show. Panelists explained their selections offered cost savings in key production areas and addressed animal care and comfort. Find this article and more at www.nationalhogfarmer.com.

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 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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