The few days we travelled through Michigan, Indiana, Illinois, Iowa, Kansas and Oklahoma. Our windshield assessment. In the 2,800 miles we travelled, the U.S. corn and soybean crop looks real good in almost all areas (Missouri the worst). Not hard to believe at this point USDA assessment of corn production over 13 billion bushels is not out of line. The only other time the US produced over 13 billion bushels was in 2016 and corn average $3.65 bushel in that crop year. There is no doubt in our mind, considering lower corn exports, flat ethanol use and probably less usage in livestock and poultry in the coming months the days of $6 bushel corn is gone for the foreseeable future. The right direction for the swine industry.
Last week the USDA released estimated production of Red Meat supply and use. One thing that jumped out in the data is the cratering of the Beef supply estimated to decline 3 billion lbs. from 2022 to 2024 and 2 billion lbs. from this year to next. Choice Beef cut-outs were $3.16 a lb. last Friday where will they be when the U.S. Beef supply declines millions of lbs. more? As Beef prices rockets higher wouldn’t it make sense to produce Pork (red meat) that taste better as the true alternative?
We believe the USDA projection of more pork in 2024 than 2023 is overly optimistic. There is no way the U.S. production base is not shrinking. Sow slaughter is high and gilt retention low. There are producers emptying sow barns isoweans have been hovering around $10 since the 1st of April. A reflection of the future and cost to break even with a market hog. If futures are reflection of the next seven months there will be confirmed red ink. Iowa State has now estimated that the last 12 months losses have been the worse in their database history. Not exactly a scenario of more pork in 2024, is it?
We believe the U.S. consumer will aggressively buy meat despite economic issues. We look at Texas Roadhouse – middle America steakhouse. It seems everyone of them in our travels is jammed every night. Consumers voting with their money. These are not vegan bars.
Per capita of Red Meat will be lower in 2024 than 2023 there is no doubt. We cannot see why this will not push hog prices higher. The struggle the industry has when under siege it’s hard realizing it’s the dark before the dawn.
Iowa State Fair
Last Saturday we were in Des Moines. It was an opportunity to go to the Iowa State Fair, we had never been to a State Fair. (We don’t have similar scale in Canada). On Saturday us and about 100,000 others descended on the fairgrounds. You learn really quick that one of the keys is deep fried food. Deep fried corn, corn dogs, tenderloins, pickles, cheese curds, pork chop on a stick, etc. There were rides, numerous people selling almost anything you can think of, republican presidential candidates (we talked to one for 5 minutes told him that the pork industry is in big trouble right now interestingly he knew already of the financial losses of the big players in our industry).
Of course, we visited the cattle and swine barns. We observed the show pigs. All the Barrow show winners were Hampshire’s. A signal in itself how show pigs and commercial production are totally different. It’s not to the point of different species but maybe close.
Our friend Mike Doran invited us to attend the auction for the Iowa Foundation for Agricultural Advancement. Mike was one of the organizers. The foundation raises money as a non-profit to provide scholarships, financial awards and incentives for college bound Iowa youth in the area of agriculture.
The auction was held in a full room. There were 16 lots, cattle, hogs, sheep and chickens. The 16 lots raised in total for the foundation $704,500, $223,000 more than the record amount previously.
Fareway stores of Boone, Iowa a retail chain of about 130 stores purchased the grand champion FFA market hog for $150,000.
It was quite impressive to us the dedication of Iowa’s livestock industry to raise money for Iowa youth to attend agricultural postsecondary programs. To illustrate the importance Iowa puts into ag, Iowa Governor Kim Reynolds attended the auction to be seen and show her support in front of the hundreds in attendance.
Jim Long and Spencer Long in front of the swine barn at the Iowa State Fair