Jim Long Pork Commentary, Lean Hog Futures show Positive up Movement, February 19th 2019

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Jim Long, President and CEO Genesus Genetics

Lean Hog Futures show Positive up Movement

 

Last week the U.S. lean hog futures saw some positive up movement. April Lean Hogs increased $4.48 to $59.525, while July and August both closed over 80₵ lb. There is no doubt in our minds that the future lean prices are indicating a belief that supply-demand factors (probably China) will lead to higher prices i.e. October 69.45 later in the year. In the meantime most producers farrow to finish continue to lose money at rate of $20+ per head.

A couple weeks ago, at the Manitoba Swine Seminar in Manitoba, G Bilbsey presented data on cost of production in the U.S. by Agri Stats. A professional bench marking service for swine industry. We thought it was interesting.

 What both charts show is the variation and potential opportunities in our industry. Top 25% is a reasonable target. On weaned pig costs the difference of pigs weaned per sow can alter that greatly.

One thing about average costs. Half of production is below average costs.

Non GMO

Last week we saw a commercial on U.S. TV advertising Non-GMO Dog Food. We found that interesting that business people would see a market for dog food that is labelled Non-GMO. We did some research and found a survey that said 43% of U.S. dog owners would pay more for NON-GMO dog food.

As a pork producer it makes us wonder what consumers will do when faced with GMO-Gene Edited Pork. Will they pay a premium for Non-GMO just like they are for organic pork now or will GMO pork face such an uphill battle it could sell at a huge discount if bought at all.

Point is if Americans won’t feed GMO food to their dogs what chance does GMO pork have with consumers to eat themselves.

European High Court has ruled that GMO and Gene Editing are the same thing. They need to follow all similar legislation. Europe is the second largest pork market in the world. There is a very good chance no GMO-Gene Edited Pork will ever be legal in Europe.

In America we see housing, anti-biotic, organic issues continue to be factors in the pork market. In the face of this some believe GMO pork will be accepted (but not dog food?).

We have not forgot what Ernie Meier an executive from the world’s largest restaurant chain and iconic American brand McDonalds told us all at the National Pork Industry Conference last year.

He warned us all explicitly Don’t expect McDonalds to explain or sell to their 69 million daily customers Gene Edited- GMO pork. When McDonalds says this we must pay attention.

If we can’t sell Pork that’s a real problem. We all need customers.

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Jim Long Pork Commentary

www.genesus.com

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