Jim Long, President and CEO Genesus Genetics
Last week we continued our road trip going to Ireland. We have never been there before. Beautiful country.
Like the rest of Europe and the UK, Ireland producers have suffered from high feed prices relative to hog prices. Hog prices are at record levels but with the current feed prices producers still lose up to £35 ($40 U.S.) a market hog.
The sow herd is estimated to have liquidated by 10-15% with liquidation still ongoing. Similar to most countries across Europe.
Unlike England where half the sows are outside, Ireland’s production is all indoor confinement.
Much of Ireland’s pork is sent to England for consumption.
Ireland, like other countries, is seeing an increase in sow mortality attrition. It’s amazing to see sow removal rates as high as we did. It is a reason Genesus is gaining market share in these markets. Most producers realize dead sows don’t have pigs.
In Ireland, we visited Glenmarshal Sires owned by Trevor Shields. Genesus has worked with Glenmarshal for seven years. We have an excellent relationship with Trevor and his team. Over the seven years, our joint customers have grown from zero to a significant percentage of the market. Glenmarshal is Genesus’ exclusive supplier in Ireland and sends weekly shipments to England, Scotland, and other countries. Pigs that live and pigs that grow are a big reason for Genesus’ growth.
Producers utilizing Genesus recommended rations are benefiting from better income over feed costs. One of the biggest challenges Genesus has been convincing nutritionists that we can feed such a low-cost ton of feed. The confirmation research analysis from the world-renowned Kansas State University Nutrition team is helping us turn the tide. It only makes sense for us to recommend rations that maximize customers’ financial results.
On our trip, we visited with packers and processors. The challenge for all is the eating experience for the consumers. A heavy emphasis on low backfat has pushed packer marbling levels below 2. This type of product is not what drives consumer eating satisfaction. Genesus has 3.8 marbling, a huge difference and one that packers – retailers can get benefits to fix this taste – flavor problem.
Genesus now has more nucleus – multiplication in Great Britain than PIC. Interesting as PIC started in Great Britain and is a listed company on the London Stock Exchange. No doubt PIC is the biggest swine genetic company in the world. It dwarfs the others including Genesus. It’s been a tough year for Genus plc much like the margin in the hog industry their share value decreasing from a high of 6,310.00 to 2,684.00 shedding about $2 billion in value. We expect it can’t be much fun for Executives who have to justify the huge loss in stock value to the many different institutional shareholders. Big difference between the institutional shareholders of PIC to Genesus where we are pig farmers working to make a better pig. We know what washing farrowing room takes and we know it’s best not to have sows with prolapses.
U.S. Pork Exports reached the highest week of the year at 31,300 Mt. We expect to see better export numbers as Europe’s hog price has increased and supply is dropping which is helping U.S. export markets.
USDA May Quarterly Annual Product predictions came out last week. For Beef 2022 27842 million lbs., 2023 25950 million lbs. A decrease predicted of 1.9 billion lbs., less Beef in 2023. A decrease of major proportion. Around 7%. USDA predicts a small increase in pork production in 2023 from 2022 of 300 million lbs. We would be surprised right now if pork production increases. The Beef decrease would be hugely supportive to Pork prices in 2023.
June Lean Hogs got down to 97¢ recently. Recovered now to $1.10 lb., cash has held. Iowa-S. Minnesota $1.13 lb. We expect $1.20 plus.
We have written we expect China’s hog liquidation which started last July would begin to show up with less hogs coming to market in the second quarter. We believe the only indicator of the reality will be China hog prices.
Certainly increasing so far in the second quarter. We expect as fewer and fewer hogs come to market prices will continue to increase. Price is the truth.
Our Trip to Great Britain and meeting with Europeans at the British Pig and Poultry Fair reinforced our belief that Europe’s hog production has begun to decrease and will continue to. Increasing prices in China tell us the liquidation of sows is leading to fewer hogs. We know by all statistics there are fewer pigs in the U.S. As weeks go by the combined pig production of the Big 3 with over 75% of the world’s production in China, Europe and USA will continue to decrease. Price is the only way to ration supply. Prices will break all previous records; the challenge is the daunting price of feed.
In front of Glenmarshal Sires AI Stud. From left to right: Peter Stenka of Glenmarshal and William Healy, Glenmarshal International Manager; Paul Anderson and Simon Grey of Genesus; Trevor Shields, Owner of Glenmarshal; Glenmarshal AI Station Manager, Lynne Flynn; and Jim Long of Genesus.
From left to right: Paul Anderson, Simon Grey, Spencer Long, and Jim Long of Genesus at the Guinness Brewery in Dublin, Ireland. Fantastic tour, still don’t like Guinness.