USDA Predictions

Seems there are thoughts of significantly increased pork production in the coming months by USDA, this is depressing prices. This is the same USDA that predicted more pork in 2020 than 2019 (they were wrong); the same USDA that June’s Hogs and Pigs Report had a 2% decrease year over year in inventory. The latest month of full data was down 13% year over year.

PRRS 144

To increase production, PRRS 144 must not raise its ugly head this fall and winter. Wishful thinking.

Pork Export to Mexico

If you look at Mexico’s import of pork from USA, they are at record levels (YTD up 28%) despite pork at very high prices. There is no reason to expect less pork exported to Mexico in the coming months.

Sow Herd Inventory

Currently, sow herd liquidation is at major levels in Europe and China due to hog prices being below cost of production. We expect total global production of pork to decrease in 2022. This is price supportive.

We question if there is significant expansion of sow herd in USA. There is next to no new sow barn construction. Some existing sow farms are being restarted but also some farms are de-popping. Net we don’t think there is much change in sow inventory.

Increasing sow mortality of over 14% will limit productivity increases. Dead sows don’t produce pigs. The continued increased sow mortality from poor genetics will hamper productivity growth. A sidebar to this is this is the farmer arithmetic. Six years ago, sow mortality was 7% now it averages 14% with obviously half the herds over 14%. Let’s assume 6 million U.S. sow herd. An increase of 7% in annual sow mortality is 420,000 more dead sows a year or 8,000 a week. As a value of $1,000 sow lost value and opportunity, that’s an industry loss of $8 million a week. Also wonder why sow slaughter is down, an extra 8,000 a week dead sows don’t get to slaughter. Increased sow mortality attributed to poor genetics is a big factor in economic loss and lack of productivity gain.

Questioning Demand?

A year ago October lean hogs were 65¢ lb. Now 82.50¢. If we had said USDA pork cut-outs would be $1.06 today a year ago, what would most of you think? – “wow! that is a great price, obviously, supply-demand is positive. This is wonderful.” Point is the experts who question demand currently are missing much. China beef cut-outs are $327, pork $106. Pork will be supported by beef prices as the only red meat alternative. Whole chicken prices are $1.06, a year ago 63¢. Chicken placements -1% last week. We don’t see much increasing total meat supply while demand is good. Most consumers love meat and will pay for it. Vegans not so much!

Summary

China production base is declining due to financial losses almost incomprehensible and continued ASF problems. In most of Europe, producers are losing 35-50 Euros a hog. This is liquidating sows. U.S. production is stable, so is Canada’s. We expect supply-demand globally to support hog price in 2022.

CFAP 1 Top-Up

The battle continues for producers to get the promised $17 per head from the CFAP 1 top-up. Anyone who read the personal attack letter from NPPC on me can see that the NPPC makes no claim of effort to help get CFAP 1 payment of $17 per head, which is $625 million to many producers and our 36 million hogs.

Below is a transcript of an interview, Clinton Griffiths editor of Farm Journal with Ag Secretary Tom Vilsack (former Iowa Governor of the largest hog producing state). It appears Secretary Vilsack is committing to the $17 to be paid.

Vilsack was asked the question by Clinton Griffiths:

“You mentioned recovery here at home, I know the Covid situation, the pandemic has been top of mind. One of the questions we got from Jim Wisemeyer at Pro Farmer is asking about the top-up payments to hog producers, initially promised at $17 per head, have not been made yet. Do we know yet? Are there any plans on that front? Any movement there? What does the future look like?”

Secretary Vilsack response:

“Well, I think if I’m not mistaken, we just recently announced those payments are going to be forthcoming very, very soon. I think that was last week or the week before the last when those contract payments that were announced if that’s what Jim’s talking about. Obviously, there were livestock top-up payments made early in the pandemic, early in the process, early in the administration, which is part of the $11 billion announced and obligated and a portion of those resources have been provided to producers. When we came into this situation we faced a USDA, as was the case with I think probably as well as a number of other federal agencies and departments where we had significantly fewer people than we had since the last time I was Secretary, I think somewhere in the neighborhood of 3,000 to 4,000 fewer people working at the USDA. At the same time were trying to get these resources out the door and do all this work that’s important to people, were also trying to staff up and deal with the pandemic. It’s been, I think, a pretty amazing effort on the part of our team to get as much money as was possible out the door, to get as many of these programs started announced to get the process and resources through the process. I’m pleased with what we’ve done, obviously, we’ve still got more to do and we’re going to continue to make announcements and continue to make payments over the course of the next several months.”

Once again thank you to all who offer support to our fight for CFAP 1 top-up. Below a note from reader re NPPC attack letter.

Jim,

As Plato said “No one is hated more than he who speaks the truth.” Keep fighting the good fight! Courage is contagious.