Jim Long, President and CEO Genesus Genetics
This week we spoke at the National Pork Industry Conference (NPIC) being held in Wisconsin. The talk was on a World Market update.
- Our Premise – The three major hog-producing areas in the world USA, China, and Europe are all cutting production at the same time. This has never happened before.
- Feed prices have pushed the cost of production to record levels all over the world. Some relief in sight.
- Spain 370 Euros/ton or over $10.40 a bushel, was $11.60 a bushel
- China 3128 RMB = $12.50 a bushel, was $13.70 a bushel
|Breeding Pigs||11,415||11,004||– 411||– 3%|
|Total Pigs||145,877||141,516||– 4,321||– 3%|
Europe Pork decline 5% Q1 – was 7% lower in March
- 1.48 million sows May 2022
- Germany has declined 6.2% since December 1 (-100,000) down to 1.48 million. Down over 200,000 in the last 18 months.
- High feed prices
- Loss of exports due to ASF
- New animal welfare regulations
- 12% less pork in Q1 vs. a year ago
- The largest producer in Europe
- Business model – contracting unlike rest of Europe it has been the only country in Europe to expand in the past two years
- Last ten weeks slaughter has declined year over year
- Has the highest price on record – just over cost of production
- Livestock industry under huge pressure for nitrogen pollution
- $27 billion USD budgeted to radically reduce livestock production through farmer buyouts – voluntary to start with
|Sow herd (1,000 head)|
- Huge protests underway – some estimates sow herd will be cut by 30% -300,000 sows. Less hogs coming
- Sow liquidation began last July – 10 months later is March-April.
|China Average Hog Prices|
|Price per lb.||35 lb. Feeder Pigs|
|Low was March 18||85¢ lb.||$59.60|
|Week of July 7||$1.38 lb.||$103.29|
- The only reason the price increased is because of fewer pigs. China just had its 1998.
|June 1 USDA Hogs and Pigs Report|
|Kept for Breeding||6,236||6,220||6,168|
|Pigs per Litter Dec.-May||11.00||10.95||10.97|
|Sows Farrowing Actual Dec-May||6,329||5,964||5,904|
Why less Hogs?
- Financial losses during Covid crisis
- High feed costs
- Difficulty to get labor
- High building costs – $4,000 sow farrow to wean
- Generational change
USA – Demand
- Chicken production lower year over year with prices now $1.60 lb. a year ago $1.05 lb.
- Beef cow liquidation and lack of Heifer retention at record combined levels. USDA projecting almost 2 billion lbs. less Beef in 2023 then 2022 (-7%). Equal to about 4 weeks of hog production.
- Inflation – we don’t think it will cut U.S. Pork demand – consumers will cut out other items. Beef $2.60 cut-outs – Pork $1.08 cut-outs.
Beyond Meat stock (Nasdaq: BYND)
- 234.90 High in 2019
- 27.17 Last week
Market capitalization – down -$15 billion from peak
Down -$1.74 billion since January 1, 2022
Taste does matter
- Survey by Iowa State of 2,000 U.S. residents
- Quote “Around 60% of the women in the survey said they would be unwilling to eat and purposely avoid gene-edited food.
Our Concern – Gene-Edited Foods
- We support technology but we need to have customers for our Pork.
- I.E Paylean legal product – one customer China says no. Now no Paylean. What happens when one customer says no to Gene-Edited?
- Challenge of Euro to U.S. dollar
- A year ago, 1.18 Euros to $1 USD – Now 1.03 Euros to $1
- This makes U.S. pork less competitive in World Markets at an almost 15% change
- Year to date exports down -24%
- Thank god for Mexico as it’s up 11% and is the leading export country
- China starts up most U.S. plants approved unlike Spain and Canada
- Our premise is China, Europe, and the USA are the major hog-producing areas with 75% of the world’s production all down at the same time, probably the first time in history.
- U.S. hog prices in our opinion are at minimum the same as this past 12 months with significant upside as global pork supply craters.
Jim Long President & CEO of Genesus gives a presentation on World Markets
Spencer Long of Genesus gives a presentation on the Genesus Jersey Red Duroc
Genesus hosted reception at the 2022 NPIC