Pork Commentary
Jim Long President – CEO Genesus Inc.
January 13, 2014
Global Hog Price Update
The US exports about 25% of its pork production and Canada 50%. Both countries have significant price dependence from Global Pork Export demand. We always believe hog prices in each significant importing country is a barometer of where USA-Canada exports are trending and we use these as an indicator of how we feel the USA-Canada hog prices will be moving. Our most recent snap shot tells us on a US dollar and liveweight by the pound that all countries currently have higher prices that both Canada and USA.
PED
Last Saturday the Wall Street Journal did a feature on PED. Of course few of us read the Wall Street Journal, as it is for the gentrified of the East Coast (We got an article sent to us). What the article talked about is PED will mean fewer pigs and pork, which will probably lead to record retail pork prices this coming summer. Couple that with record beef prices, the American consumer will almost pay as much for Pork as the people of Russia, China, Mexico, Japan, etc. do now. Of course the GDP per capita in the United States which should mean more consumers buying power is significantly higher that where people are buying pork in markets at $1.00 US b. liveweight now. PED continues to move with over 2,000 officially reported cases. We expect that many are not reported, there is no mandatory reporting and when all your baby pigs are dying, you don’t need to have a lab tell you why. WE expect that when the dust settles on PED the US will have lost at least 5 million pigs from PED (mid 2013-2014). Currently Canada has seen no PED cases. We believe the 5 million fewer hogs will have added $10-20 of value on a market hog. (This includes the extra carcass weight of current hogs)Minnesota and Iowa Pork Congress
We will be at the Genesus Exhibits at Minnesota this week and Iowa next. We look forward to you visiting and giving your opinion on our industry. Genesus is also having a reception on the Wednesday of the Iowa Pork Congress, please come, visit and have a drink on us.Canadian Dollar
The Canadian Dollar a year ago was worth more that the US dollar ($1.01). Last Friday it closed at 91.75¢ to the US Dollar. Canada’s hog industry was not competitive with the US at a par dollar. The drop in US Dollar is a very positive win for Canadian hog producers. With Canada’s hog price tied to the US hog price, Canada exports 50% of its pork production (priced US dollars), labour cost, electricity, taxes etc. stay in Canadian but the hog price moves higher. For example a load of feeder pigs sold for $92.00 US per pig, when converted into Canadian dollars is $100 per pig, $8.00 more. Many expect the Canadian dollar will continue to decline relative to the US dollar. We believe 85¢ is where it will go. A much needed win for Canadian hog producers.Categorised in: Pork Commentary
This post was written by Genesus