Last week we attended and participated at the Iowa Pork Congress in Des Moines Iowa.
- Iowa Pork Congress is usually the largest state event with Iowa having around 25% of all U.S. pig inventory.
- This years Congress was well organized and had more exhibits than last year.
- It appeared to us the attendance would be down due to snow storm and cold weather that created travel issues.
- Our sense from Congress is that most producers have had enough selling hogs below profit. It’s not been an easy business the last few months. There is optimism but the recent decline in lean hog futures has been disheartening. Now many models are showing no profit farrow to finish before May.
- The tariffs on U.S. pork imposed by Mexico and China are hurting hog prices without a doubt and in turn profits (or lack of).
- The lack of profits in turn is leading to less talk about new sow units. The few that are happening are few and far apart.
- We do not expect any sow herd expansion is happening, won’t go as far as to say liquidation is occurring but we wouldn’t be surprised.
Labour, labour, labour…
Not many discussions in the hog industry go very long before there is dialogue on labour, lack of, quality of. With the U.S. unemployment at decade’s lows it is a very real challenge to find competent people in farms, trucking, feed mills and slaughter plants. We expect this shortage of competent people will be restricting productivity gains at pig farms. Lots of farms are not fully staffed and that in turn lowers production results. The lack of labour is also a factor for people considering expansion.
Question we got asked several times was “When will Prestage’s New Hog Plant in Iowa open?” Most producers expect its opening will support hog prices.
We have no special knowledge of the potential opening but March seems to be used a lot in conversations. We were told Prestage’s are being aggressive in offering high percentage of pork cut-out contracts to procure hogs. Capacity of plant 8-10,000 head per shift.
From the Expo:
Duroc Sires continue to gain ground in the industry at the expense of synthetic breeds. Growth, livability, and meat quality main drivers. Producers also are looking for prolific females that have the temperament and leg structure for group housing. Some genetic companies’ lines are really challenged and this is leading to high sow mortality and low sow salvage.
China National Pig Inventory at end of December 2018 was 366.2082 million, down 38.2581 million from December 2017. The sow inventory at the end of December 2018 was 29.7314 million, dropped by 699,900 head compared to November. The sow inventory 2018 decreased 9.64% compared to 2017. Down 4.5 million sows December to December. U.S.D.A. total swine inventory on the 1st of December was 74.55 million, China has decreased over 50% of all the U.S. industry!
Folks we don’t want to be beating a dead horse, but as we repeatedly point out China is having massive beyond comprehension liquidation, with an estimates 699,000 sows going out of production in December alone, the liquidation continues at an unprecedented rate. We expect one of the biggest challenges going forward will be how much how fast containers carrying pork can get to China “when this dog hits the end of the chain!”