Combined USA – Canada Swine Inventory continues to decline
USA – Canada December (thousand head)
The December USA – Canada combined swine inventory report continues to decline as the breeding herd is down 90,000 year over year, while the year over year hog inventory is lower by 400,000. In the last four years the USA – Canada breeding herd has declined about 650,000 while the market inventory is lower by just over 5 million.
The continual decline in the breeding herd and market inventory is a true reflection on the lack of profitability (meaning big losses) in the North American swine industry. Producer’s couldn’t and wouldn’t continually produce pigs at a loss and consequently the large decline in inventory. In the four years of continual swine production decline the USA – Canada people population has appreciated approximately 20 million while the world’s human population has gone up by about 400 million. More mouths with less pork to feed them. It is little wonder lean hogs are over $1.00 lean per pound?
The stand alone Canadian fourth quarter swine inventory indicates a year over year decrease of 20,000 breeding animals all other pigs were up just under 1% as US country of origin labeling has encouraged a few more pigs to stay in Canada to be raised as market hogs. With the Canadian dollar now stronger than the US dollar, high feed prices and a less than motivated producer and financial sector we see little happening to increase Canada’s swine production.
|Kept for Breeding
Canada 4th Quarter (thousand head)
||2008 breeding stock
||2010 breeding stock
||2008 all other pigs
||2010 all other pigs
“The taxpayers have subsidized ethanol for far too long. This amendment will simple bring that slowly to a stop.” Said Rep Jeff Blake R –Ariz as he described the blocked funding. Blake called the ethanol subsidization a “boondoggle for 30 years.”
We expect corn ethanol will be continually squeezed in the coming months as high food prices shock the American economy. As you know, we believe the US corn ethanol policy is one of the most insane government programs ever. The economic, social, moral, domestic and global issues make the continuation of burning of our food an unsustainable mandate.
- The USDA released last week a report estimating US corn plantings could be 92 million acres up from last year’s 88.2 million.
- The USDA projected this coming year’s soybean plantings at 78 million acres up 600,000 from a year ago.
- Combined, the US Corn – Soybean projected plantings are almost 5 million more acres year over year. Nothing like high grain prices to stimulate production. Land from conservation programs and pasture are the main sources of new acreage. We expect to see similar planting gains throughout the Northern Hemisphere, Canada, Russia, E.U., and China are going to plant fence row to fence row (if there any fences left). The reality is planting a crop and making a profit is one of the easiest plays in the global agricultural economy in 2011.
- Corn Ethanol took a big hit when congress last Saturday voted by a strong vote 285 to 136 to prevent the EPA from implementing the 15% ethanol waiver. They also rejected federal spending to contract blending pumps and/or ethanol storage facility.
The lower USA – Canada swine inventory confirms the lack of hog supply. When coupled with strong domestic and global pork demand there is little wonder the $1.00 June lean we projected six months ago has come to fruition. The lower hog supply unfortunately reflects the losses our industry has suffered. Profits are coming but not anytime too soon.
- This week at Genesus we had visitors from China. China’s hog prices have reached $1.10 US live weight a pound. There appears to be expansion of sow units in China. Lots of room for productivity gains with 15 pigs per sow per year the China national average. At $1.10 a pound in China we expect USA – Canada will have opportunities to export some more pork in the coming months.
Categorised in: Pork Commentary
This post was written by Genesus