Jim Long, President-CEO, Genesus Inc.
Another Interesting Week
In the World of Hog Production
U.S. hog slaughter last week 2,444,000 – a year ago 2,653,000. Down 8% year-over-year. USDA projected 2% year-over-year decline in June 1st USDA Hogs and Pigs Report. U.S. slaughter since the first of July down over 8%.
U.S. hog slaughter down year-over-year as well as slaughter weights; i.e. Iowa – S Minnesota averaging 276.9 lbs. – a year ago 279 lbs. Certainly appears hogs are not backed up. We don’t believe anyone is hanging onto hogs going into the fall with traditionally lower prices.
USDA carcass cut-out closed Friday at $116.59 reflecting continued strong pork demand. Lean Hog Prices National Base Lean Hogs 53-54% $103.47.
Appears to us slaughter hog numbers will continue to be significantly below 2020 for the rest of the year. Even lean hog futures traders have got October hogs over 90¢. The combination of the crush financial debacle of 2020 and PRRS 144 is cutting hog numbers.
We also are wondering if hog numbers are being affected significantly by sow mortality of 17% plus in many large production systems. With mortality at that level, we see a decreased voluntary culling of sows. Sows that in the past would have been culled are kept in production in an attempt to maintain sow inventory. We also expect high sow mortality and involuntary culling is leading to sow herd inventories lower than the target, leading to fewer pigs being produced than you would expect from many sow units.
The lower numbers of slaughter are also being caused by labor issues. Many farms are understaffed which affects productivity. Some farms are half staffed. No way that leads to more hogs. It also discourages expansion. We expect labor issues in sow units are cutting production by 2-5%.
Below, from a reader in China (we took out company names but all with several 100,000 sows)
- Company X is in very dire financial and legal status and not expected to survive.
- Company Y cannot pay its bills and borrowing from its suppliers. The suppliers tells us that they themselves can’t stand much more of it.
- Some large outfits have recently changed leadership as the CEO and CFO etc. are resigning.
China’s Hog Industry currently is losing big money with prices below cost of production and continued issues with African Swine Fever. The price of corn last week was $9.75 U.S. bushel, the lowest this year. China has forward bought little corn from USA since May. We expect China’s swine industry losing minimum $400-500 million U.S. a week at current price levels is causing significant liquidation. Don’t need corn to feed pigs that don’t exist.
NPPC Confirms No Effort to Get CFAP 1 Top-Up
Last week, the NPPC sent out a letter to which be best described as an attack on me. We have attached the letter so you can read it in its entirety.
NPPC Newsletter quote: “A critic across our northern border continues to circulate inaccurate information about efforts to bring financial relief to US pork producers.”
Yes, I live in Canada but I choose to be a U.S. hog producer. I believe in the U.S. industry. I believe in its future and as such have significant investments in swine production in the USA. I am proud to be a U.S. hog producer. Our company has many customers in the U.S. We see the commitment they have in money and soul. We see how they suffered in 2020 pounded by the Covid crisis. I expect the writer of the NPPC letter doesn’t own pigs, never owned pigs, lives in Washington, and picks up a big paycheque. Of note, the writer never had the guts to sign the NPPC letter. Typical Washington elitism. Time to drain the swamp.
“The USDA’s Coronavirus Food Assistance Program (CFAP versions I and II) has paid out nearly $1.2 billion to U.S. hog farmers to date. Based on the structure of the program, most of these payments went to smaller pork producers who most needed the assistance. Regarding a third round of CFAP payments, announced in the final days of the Trump administration, Ag Secretary Vilsack recently said, “We’ll target future assistance, rather than top-up or across-the-board actions that don’t account for actual losses or payments that have already been received.”
The above is exactly been our point in all our past newsletters. NPPC is doing nothing to fight for CFAP 1 top-up. All commodities but Hogs have got the CFAP 1 top-up. Why not Hogs? Read the NPPC newsletter, do you see where they even tried to get money for producers CFAP 1 top-up? Below CFAP 1 & 2 commodities including CFAP 1 top-up.
It appears USDA paid the CFAP 1 top-up to other commodities, but NPPC Washington bureaucrats don’t even in their own letter indicate any attempt to get it for producers. They don’t care, their paycheques get paid every week regardless. The CFAP 1 top-up should be $624 million if you divide that by $17 a head is support for 36.705 million hogs. That’s a lot of help for many producers.
The arrogance of NPPC to attack me for fighting for what was promised to hog producers and already paid to other commodities, it’s a classic sign of a bureaucracy about themselves, not the producers.
The NPPC letter goes on making claims about achievements. Some are laughable: Vietnam and the Philippines – ASF has destroyed hog supply in both countries. Both countries are importing from all over the world even from other ASF-positive countries. Ask NPPC what countries can’t import to them?
Also, in the list of NPPC achievements no mention of Prop 12 in California. They must figure, best if they don’t mention it and then maybe everyone will forget their lack of success on that subject.
Point is, a lot of NPPC effort is to shoot the messenger. We have received countless emails of support from producers for our advocacy for CFAP 1 top-up. We expect NPPC is getting asked why, as they say, “missing in action” so the NPPC beltway bureaucrats attack rather than lead a fight for $624 million CFAP 1 top-up promised and delivered to every commodity but hogs. The $624 million would help many producers just like $7.2 billion helped the cattle industry. We appear to be treated as a second-class industry and it appears cattle, corn, and milk organizations have much more effective leadership.
“HOTH knows not why the critic over the border is so determined to undermine producer-led NPPC. What we do know is that he claimed NPPC is somehow missing in action, an insult to the thousands of American hog farmers and their families who have played hands-on roles in the advocacy results we have achieved together to support our industry. NPPC regularly communicates its advocacy priorities and results directly to its investors. Hog farmers have enough problems. They don’t need an interloper making wild and inaccurate claims.”
Have to say I find this last part of the letter interesting. I have called the President of NPPC board of directors and left a message asking if this letter was approved by the board of directors (it’s not signed by anyone and I have not received a call back yet) or is it a Washington NPPC bureaucrats pitiful rant. If you read everything I have ever wrote never have we challenged the intentions or goodwill of producer directors. We have challenged the need for new leadership in the bureaucracy. When people are getting paid half a million a year to lead an advocacy for producers you can expect effort and results. As you can read in their own newsletter the lack of effort and result on CFAP 1 top-up.
NPPC Newsletter quote “an insult to the thousands of American hog farmers and their families”. As an American hog producer, this is ludicrous to claim our fight for producers to get $625 million is an insult, this only shows the ignorance and arrogance of the NPPC bureaucrats. As far as being called an “interloper” by pushing for producers CFAP 1 top-up money. Cattle got it, Corn got it, Milk got it, Soybeans got it, etc., etc., etc. but not Hogs. This NPPC letter is their own sad testament and just confirms their Missing in Action for fighting for CFAP 1 top-up for producers. Time to clean house in NPPC bureaucracy. Get people that will lead a fight for producers not only their own paycheques.
To all producers, Time to get engaged about CFAP 1 top effort. Also, continue to call Congressmen, Senators, Ag Secretary Vilsack’s office. CFAP 1 top-up was paid to all other commodities, why not Hogs? We are on our own as this NPPC letter verifies that NPPC bureaucrats are not trying. It’s a sad situation but we have little choice with the lack of NPPC Washington leadership we have.
This post was written by Genesus