Jim Long Pork Commentary, Global Market Round-up, September 6th 2021

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Jim Long, President and CEO Genesus Genetics

 

Global Market Round-up

China

The hog price in China is 96¢ U.S. lb. (14.2 RMB/kg). Losses continue for China’s pork producers. The Financial Times estimates that publicly owned swine companies have lost over $70 billion U.S. in stock value since February. That’s a massive revaluation.

This past week USDA came out with an estimate that China’s hog production will decline 14% in 2022 caused by ASF, other health issues, and contraction in China’s hog production due to financial losses. 14% is a decrease of about 1.8 million heads a week.

According to China’s Ministry of Agriculture and Rural Affairs (MARA) the cost of raising pigs this March to June was 2800 RMB per kg ($1.58 U.S. liveweight a lb.). The average current selling price is 14.2 RMB kg (96¢ lb.). The loss is 1.32 RMB kg (-64¢ U.S liveweight a lb.). Simple arithmetic; average current loss per head is $160 (250 lb. hog). In the first 6 months of the year, China averaged just under 13 million hogs marketed per week. Farmer Arithmetic; $160 per head loss average, times 13 million head = just over $2 billion U.S. a week loss?

This type of loss will be leading to huge liquidation and obviously ending most if not all construction. The loss level is unprecedented; no wonder reports of pigs dying without feed, bills unpaid, biosecurity being cut, disease increasing. We expect China will be cutting production at levels we can’t comprehend. The USDA projected decrease of 14% is probably not high enough.
China imports from the USA just under 5,000 tonnes of pork in the latest week. One thing this confirms, China is not bringing in much pork.

Europe

We understand the EU/Netherlands governments have a program to pay hog producers to close their farms. We understand the budget is about $500 million. This will lead to fewer hogs in the EU.

30 kg (66 lb.) feeder pigs from Denmark are selling for 200 DKK ($30 U.S). The 52-week average is 326 DKK ($52 U.S.). These current prices are well under the cost of production.

In Germany, the carcass price of hogs is 1.25 Euro/kg or 67¢/lb. U.S. Germany buys millions of feeder pigs from Denmark per year, the current feeder pig price reflects the poor market conditions in Germany. China’s pork imports slow down and ASF in Germany is increasing pork supply in all of the EU and pushing down prices.

USA

U.S. September corn closed Friday at $5.08 a bushel, down for September, being at $6.56 in early May. The $5.08 is the lowest price since early April. We expect to see some areas in the USA to be below $5.00 a bushel very soon. China hasn’t bought significant corn amounts since May. If major liquidation in swine is ongoing in China they won’t need as much corn. USDA projection of 14% decrease in China hog inventory would be about 90 million fewer hogs and a lot less corn needed.

CFAP 1 Top Up

Thank you to all who called and sent notes regarding the personal attack on me by NPPC. It was nice to see the support from producers who also feel frustrated by NPPC lack of effort to push the USDA to pay the $625 million promised and owed to producers for Covid related damages.

I have to say I found it sad that the NPPC Washington bureaucrats had so much energy to condemn me for pushing for producers to get the promised Covid Relief related to about 32 million hogs. Each producer’s share of the $625 million matters. All will cash the cheques if they arrive.

Fortunately, I am in a position to highlight the need for our fight to CFAP 1 top-up. We have many thousands of email addresses to send the message for all of us to fight for what was promised and already paid to cattle, dairy, corn, soybeans, etc. It appears the NPPC Washington bureaucrats care more about themselves than the producers as they in their own letter confirmed they have done nothing to get CFAP 1 top-up.

After a while, there is a theory, that organizations like NPPC become more interested in protecting their own bureaucracy than being real advocates for the producers that pay them or what they are to represent. It becomes bureaucracy for bureaucracy. Throw in the fantasy land of Washington and their perceived self-importance, Abracadabra = useless Bureaucrats. NPPC has been MIA, if the CFAP 1 top-up happens it would be ludicrous for NPPC to take credit. They are so shameless, don’t be surprised if they do.

Good news, the Chief Bureaucrats are leaving NPPC. The architects of failure to deliver for producers will be gone. The NPPC directors have a chance to clean house top to bottom. Get advocates, not bureaucrats. There is hope. But hope isn’t a plan. We need leaders.

To all who have been calling Congressmen, Senators, and Vilsack office, keep it up. It’s our only path. There is $625 million promised. All other commodities have been paid. Keep on it. It can work if we are relentless.