Pork Commentary – January 28, 2013 – Iowa Pork Congress

Iowa Pork Congress Report

Last week was the Annual Iowa Pork Congress held in Des Moines.  Iowa with approximately 25% of all pigs in America is the home for this premier winter show.  As usual there were a large number of exhibitors and many attendees.  Anyone serious to sell in the United States knows this is the must be at exhibition.

 Our Observations

  • The Congress was well organized and the venue in Des Moines  is excellent.  Congratulations to Doug Fricke and the many others that made such a successful endeavour.
  • We talked to many producers and industry participants on how they see the direction of our industry.
  • To be blunt we have never heard so many diverse opinions.  Some believe there is major expansion ongoing, much of it driven by Veterinarian managed production groups.  While others see the industry is in a holding pattern with little production change.  The third group talks about the trauma of $40 per head losses and are next to suicidal.  As we said earlier tremendous diversity of opinion, probably the most we ever heard in one place.
  • You have a sense the industry is under siege from Animal welfare groups like HSUS and PETA.  The spectre and cost of alternate sow housing hangs over the industry.  The reality of the capital investments ($300 per sow) for our industry which has had too many months of negative profits in daunting.  Compound this with ever increasing time and cost to maintain auditable production records for packers to defend us all from intrusive government, food safety and animal welfare leads many producers to wonder where the future is?
  • Drought, Drought, Drought.  The mid-west counties dry in most places, any other year in January it would not be much of an issue.  This year because of last summer’s drought totally different story.  Our industry is on edge.  The hog price will probably be 10% either way of today’s lean hog future for the next twelve months.  In all likelihood hog production will have little change either way.  The wildcard we heard over and over again is crop size and feed prices in 2013.  Lean Hog Prices are historically strong, but there are over shadowed by ever stronger feed prices.  It rains $5.00 corn?  It doesn’t rain $9.00 corn.  Cost of production range up to $50 head.  The difference between success and failure.  Extremely volatile and unprecedented.  Pray for rain.
  • The January’s National Hog Farmer has an extensive article on Improvest the Chemical Castration Vaccine from Pfizer (The article even highlights more coming articles on Improvest).  Nowhere does it discuss the stigma that consumers might have to serve their children meat from sterilized pork.  In our opinion the article does not address the real risk to workers (men and women) administering the chemical castration vaccine.  The liability of companies that use the product if an employee is sterilized.
  • The article doesn’t address what below is the label of Improvest “Warning for person administering Improvest.  Accidental self-injection could affect reproductive physiology of both men and women and may adversely affect pregnancy.  Pregnant women should not administer this product.  Women of childbearing age should exercise extreme caution when handling this product.”
Label Verbatim further:  “Advice to Physician:  Accidental self-injection could affect physiology of both men and women and may adversely affect pregnancy.  If self-injection with IMPROVEST is suspected, reproductive physiology should be monitored by assay of testosterone or estrogen levels (as appropriate)
  • The Chemical Castration vaccine is a lawyers dream.  Let the lawsuits begin.  Employees getting injected would be a nightmare.  The cost of the vaccine and its administration is about $5.00 per hog.  Producers we met in Brazil had used it but stopped.  Cost didn’t justify economic results plus the risk to their employees.  There are so many other ways to try to make a dollar.  Is the moral, legal, financial risk worth it?  Read the label, how many mothers won’t trust that chemical castration won’t affect their children.  We are having hell now in our industry with environment and animal welfare zealots.  Do we need to stir up a hornet’s nest of the mothers of America?  All for the glory of Pfizer shareholders.  To be clear we are not against science (as Pfizer has accused us in person).  We are against risking our employees’ health and pork demand.  Chemical Castration Vaccine is a classic case of “buyer beware”.  We all have needled pigs.  They move a lot and their big.  It’s a tough job.  Two injections on millions of pigs.  The risk of failure and hurt employees is incomprehensible.  Follow the money trail, 60 million males  in USA a year times $5.00 per pig = $300 million.  Pfizer will be relentless to get this gravy train going.

Markets

Last Thursday the National Daily Lean Hog Carcass price 53-54% was $87.25/lb.  A month ago it was $80.76.  A year ago $85.53/lb.  Hogs have gained about $15.00 per head in value since the first of the year.  Hog Prices are now higher than a year ago with about the same weekly marketings (2,160,000).  We expect to see hog prices to slowly continue to rise, this on our expectation that the liquidation that began last July will soon begin to be reflected in fewer hogs year over year coming to market.  As far as market inventory we got strong indications from the Iowa Pork Congress that there are significant numbers of empty finishing barns.  Our expectation despite what the USDA Hogs and Pigs Report indicates marketings year over year will be lower in the summer months and hogs will push to $1.10 lean a pound. This week will be at the Manitoba Swine Seminar.  Genesus is sponsoring the major reception from 4:30pm -7pm on January 30, Please join us for some refreshments and appetizers.
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This post was written by Genesus