Jim Long, President-CEO, Genesus Inc.
Global Markets have had Big Jump
The Global Hog Market has changed significantly since late February.
All Countries converted to U.S. Dollars Liveweight lb
The big boost in prices are in the Pork exporting Countries to China of U.S.A., Canada, Spain, and of course China itself which is seeing pork supplies drop from ASF related production declines.
We expect to see strong prices for all countries that can export to China for a long time. There is strong indication part of U.S. packing industry is gearing up to send half carcasses to China. This tells us several things; expectation of long term sales, alleviates ongoing labor pressure on some U.S. packers. The economic consideration, wholesale pork in China is currently averaging 20.3 yuan ($3.03/kg, $1.37 lb.). What’s there to think about if can fill containers of half carcasses in USA and send to China and get anything close to $1.37 lb.
This past week we heard stories of retailers and processors in USA concerned if they will have enough pork to fill their needs. Time will tell but Pork like all commodities will move to the highest priced market. We have said for several months that the China ASF debacle will lead to the highest prices in history.
A Chinese Agriculture Official Tang ke, told reporters on April 17th that wholesale pork prices could be more than 70 per cent year over year. 70% is 38 yuan per kilogram (record price), $2.55 U.S. liveweight a lb. $2.55 x 200 lb. carcass = $510 U.S. per head. No wonder some packers gearing up to send carcasses. No wonder there is upside to U.S. lean hog futures.
Last week we wrote about the Chlamydia situation that has several unfortunate producers with many of them multipliers. The Chlamydia is leading to high percentage of gilts- sows not cycling. The only solution may be depopulation. The fact is it is in multiplication of around 30,000 sows, some already de-populating, some starting to do it. This will lead to a decrease of over 200,000 gilts annually available.
How Chlamydia got going, it appears there is no clear answer. This in itself must make many wonder how it moves. Has to get stopped? Is it from AI? Live pig introduction? Will depopulation actively solve issue?
With record profits the owners of these sow units must be devastated as they de-pop and lose revenue at the best profits in history. Pig production is a fragile venture, best to ensure you don’t buy in issues that can devastate your profits.
Someone asked us last week why no one else is writing about Chlamydia problem. Ask your Genetic Supplier if all gilts purchased are guaranteed to breed.
Below is article published today in Thailand in regards to CP Foods and HyLife. CP Foods a Global Mega Producer is based in Thailand with over 800,000 sows- HyLife has over 80,000 sows in Canada and a packing plant with 30,000 plus a week capacity.
Thailand’s CP Foods to buy Canadian Pork producer HyLife for 372m
April 22, 2019
Thai agricultural conglomerate Charoen Pokphand Foods (CPF) will acquire Canadian pork producer HyLife Investments Ltd for C$498 million ($372.7 million), according to a disclosure to the Stock Exchange of Thailand on Monday.
The acquisition will be made through its subsidiary, CPF Canada Holdings Corp.
Currently, HyLife Investments owns a 50.1 per cent interest in HyLife Group Holdings, which runs a vertically integrated farm-to-food pork production business, while Japanʼs Itochu holds the remaining 49.9 per cent.
HyLife operates a processing plant in Canada and two in Mexico. Through its partnership with Itochu, it has become a major exporter of fresh chilled pork products to Japan.
CPF said the acquisition will provide it with access to a cost-efficient pork production base and the opportunity to expand into Japan and North America.
Meanwhile, HyLife will benefit from leveraging CPFʼs connections, customer base and distribution network in China and the United States to increase its sale volume in those markets, it added.
HyLife reported total revenue of C$745 million ($557.53 million) and a net profit of C$88 million ($65.86 million) for the fiscal year 2018.
CPF said it will use internal cash and external financing to fund the acquisition. It had earlier bought US frozen-food producer Bellisio Parent for $1 billion in 2016.
This post was written by Genesus