Pork Commentary, June 18, 2018
Jim Long, President – CEO Genesus Inc.
U.S. 80¢ Lean Hogs!
At the first part of April CME Lean Hogs for July were 73¢ lb. on this past Friday they reached 83¢ lb. What’s even better for our industry cash lean hogs Iowa/Minnesota averaged last Friday 83.50¢ lb. A month ago lean hogs were averaging 64¢ lb. In four weeks cash lean hogs have gained 20¢ lb. and $40 per head. We have gone from losing $20 per head to making $20 per head. That’s going in right direction. We still are of the opinion that there will be lean hogs reaching 90¢ lb. this summer. The market needs to keep up the momentum.
Alberta Pork Congress
This past week we attended the Alberta Pork Congress. We spent a lot of time talking to Genesus customers at our Exhibit. There is a lot of customers to speak too, as Genesus has 59 in our Alberta sales team area. Our observations:
Crowd was relatively positive, prices right now are strong, not sure it would have been as positive in April when hogs were $60-70 lower per head.
The trade show was well organized. There were lots of attendees (producers) over the full two-day event. On Wednesday night there was a formal reception and dinner. Genesus was sponsor of the reception. It was well attended and enjoyed by all. The dinner featured crown pork roast that was carved at the table. The dinner atmosphere was professional, and it made you feel you were in a winning industry. Professional videos were used to recognize leaders in the industry. One recipient was Ben Wooley of Sunterra Farms for his tireless work on industry issues. We have been in industry meetings with Ben and would certainly agree that he thinks always what’s best for our industry. Ben is a real leader. Another recognized professional was Dr. Frank Marshal a veterinarian with a sterling reputation in Alberta and in China. We know the Genesus customers who work with Dr. Marshal have a high regard for his knowledge and passion.
Alberta Pork Congress – Formal Reception sponsored by Genesus
There are two major packers in Alberta. One Olymel is in Red Deer and the other Maple Leaf Foods is in Lethbridge. Olymel is larger and looking for more hogs. Lethbridge is smaller and essentially at capacity. Maple Leaf focuses on high pork quality with a significant amount of its product exported to Japan. Genesus customers are the largest supplier group to the Lethbridge plant.
Alberta sow inventory is essentially not moving much either way. We were at a new sow unit under construction at White Sands Colony last week but we are not aware of any other new sow units in Alberta. Olymel is offering finishing barn contracts and a program for new barns to divert pigs going to the USA as small pigs to stay in Canada. The cost of a new finishing space is about $500 CAD per space.
The Alberta region has long been a Duroc Sire market using Yorkshire/Landrace females. The movement too better tasting pork, they are already well positioned for.
Alberta has had a tough labor market for several years. The huge Oil and Gas Industry not only needs able-bodied people but created high wage expectations. This has been a factor for producers and packers. The rest of North America’s swine industry is now being squeezed by a similar reality of few people available.
Lacombe Research Centre
While in Alberta we visited the Lacombe Research Centre.The research centre is operated by the Canadian Federal Government and has a swine facility that uses Genesus Genetics.Lacombe has a world-class team of meat scientists and researchers complemented by pork quality measuring expertise. Genesus continues to push the envelope for ever better pork and look forward to continued involvement with the Lacombe Research Centre.
The China Ministry of Agriculture and Rural Affairs reported pig inventory dropped by 1.9% in May against April and 2% against last year.Sow inventory dropped by 2.5% in May against April and 3.9% against last year.Based on above percentage.It is estimated pig inventory is declined by 7.52 million and sow inventory dropped 838,100 in May.
China is a big factor in the Global Markets as the largest producer and major pork importer.The losses of over $30 U.S. per head since the first of the year appears to be triggering large liquidation.When the dog hits the end of the chain we expect China’s hog prices to rebound to $60-70 per head pulling in more imported pork.