Jim Long President – CEO Genesus Inc.
October 7, 2013
Global Pork Supply
The U.S. markets this past week had to deal with the U.S. Federal Government shut down. Due to the shutdown there was no USDA reporting of prices and hog marketing numbers. How will prices be determined on contracts? Hog prices? Stay tuned… If the shutdown continues for a long duration, it will get very complicated for price discovery.
Global Pork Production
The chart above indicates where Global Pork Production has developed over the last five years. Global Production is up 7%, and China is up 10% or about 4 billion pounds – in context China’s production increase is about equal to all of Canada’s and Russia total combined production! It’s obvious China likes pork. They produce half of the world’s production and its production appears to be still growing significantly. To put it another way, if the production of all Smithfield’s one million sows and was sent to China it is equal to about 2.5 – 3% of China’s total production. Is it any wonder they purchased Smithfield? The logistics to get one million sows into production and the packing plants is daunting. With the obvious pork demand in China, coupling the supply with demand and market access it’s an almost no brainer for the Chinese to buy Smithfield.
The 7% increase of Global Pork Production is truly a sign of demand for our product. The 7% increase is equal to about 70 million more hogs per year. The 7% increase in five years of 7 billion metric tons is equivalent to the total production in Russia, Canada, Japan, and Mexico combined.
Global Meat Production
Global Meat Production of not only pork but all meats are increasing. Beef is somewhat flat lining but pork, chicken, and turkey are growing at a rapid rate. Increased population and buying power globally is leading to greater meat protein consumption. People get money – they eat meat. The efforts of the vegetarian lobby such as HSUS (Humane Society of United States) are fighting a losing battle. The collaboration like Feedstuff Magazine and their really lame justification for advertising for HSUS should take note: Note to Feedstuff – ‘Don’t bite the hand that feeds you.’ Global Meat Production is growing. Consumers are voting with their money, eating more meat despite significantly higher prices over the last five years.
Percentage of Global Meat Production 2013
In 2013 it is estimated that 42% of all the meat consumed globally is pork. We are the dominant meat – 23 billion tonnes more than the next largest -chicken. When you consider the price of pork compared to chicken, pork has double the dollar sales globally. We believe consumers vote with their money. Pork is the global winner in meat protein by far and is growing. As an industry to keep our dominant position it is our opinion we must continue to develop new pork products, enhance food safety, but most importantly continue genetic and feeding programs that produce tender, tasty pork that consumers want to eat. That is what will drive enhanced consumption and demand; both factors that will increase hog prices.
This week we will be in Ixtapa, Mexico at Mexico’s National Pork Congress. Genesus has and exhibit and we will be a speaker at the meeting. Next week we will report our observations.
Categorised in: Pork Commentary
This post was written by Genesus