Pork Commentary

Jim Long President – CEO Genesus Inc. info@genesus.com

Country of Origin Retaliation Amount $1.1 Billion

December 14, 2015

Last week the World Trade Organization (WTO) set the retaliation amount that Canada and Mexico can place on American products in response to US Country of Origin Labelling (COOL) law at $1.1 billion.
  • The COOL law requires meat (pork) to be labelled with the country where the animal from which it was derived was born raised and harvested.
  • The COOL law established a decade ago was a compromise when some law makers (Senators) tried to ban packer ownership of livestock (hogs).
  • Four times the WTO has ruled that COOL violates US trade obligations, discriminating against Canada and Mexican animals that are sent to the United States to be fed out and processed.
  • The US House of Representatives voted in June to repeal the law. In the Senate the Democratic Senator from Michigan, Debbie Stabenow, now senior democrat on Ag-Committee has not co-operated to repeal the Law. (Suggestion – Michigan Hog Farmers call your Senator)
  • We expect Canada and Mexico Governments could rapidly and legally target imports of Pork from USA with Tariffs. Two of the largest markets for US pork. The tariff put on US pork could do several things.   Drive down the price of US hogs, Canada will have a price advantage. In Mexico due to the Tariff and and grab market share, less pork will come to Canada from USA
  • The idiocy of the COOL legislation has been proven four times in court. The US Congress has recognised and voted to repeal the law. The US Senate needs to do the same, swine producers lead by the NPPC have been against COOL from the beginning. US Swine producers need this legislation repealed before tariffs and lost markets take $10-20 per head off the market price.
The old saying most fearful words in the English language: “We are from the government and are here to help you” come to mind. There is Hope? A vote is expected this week in Congress on a spending bill could have provision that could have repeal language for the Meat provisions in COOL. Let’s hope there is finally leadership to prevent the hurt coming from tariffs on the US Swine producers. Markets Sure not a good time to be selling hogs with the National Daily Base 53-54% 56.30¢/lb. Lots of hogs with over 2.426 million for the week marketed. Packers doing just fine with US pork Cutouts 74.41 giving them a solid $40 per head gross margin.  

USDA Cut-outs

Carcass $   74.41
Loin 71.17
Butt 77.40
Picnic 49.07
Rib 131.35
Ham 71.36
Belly 101.88
Notice the highest priced products are Ribs and Bellies. Flavour and Taste seem to bring more value than leaner cuts, a decade ago Loins and Hams lead the Cutout values. What does that tell us about consumer demand? Have we taken hogs too lean?
  • Chicken Industry does not appear to be expanding week upon week for the last while; Chick placement has been mostly lower. No more chicken helps Pork prices.
  • This past week we had visitors from Great Britain. In their market breaking even to a small profit. There are no gestation crates. Group Housing really accents the need for a calm sow with good feet and legs. Some of the current genetics are quite challenged to keep sow mortality and involuntary culling low. Also, consumers and retailers looking for better tasting Pork in Great Britain. A significant number of Genesus Purebred Registered Duroc Boars in production now and expanding. Taste & Flavour is becoming a more important buying criteria.

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This post was written by Genesus