Jim Long's Pork Commentary: USDA March hogs and pig report

Wed, 04 Apr 2018

More pigs: There is no doubt that the US continues to increase pig production. This is being accomplished by two things – more sows and increased productivity.

With the increase in the breeding herd and more pigs per litter, the US market hog inventory continues to grow year over year.

The good news for producers is that Packing Capacity is available to handle the increased production.

We expect the breeding herd will continue to grow in the 1% range per year and market hog numbers to increase by 2-3% unless we have financial losses for a sustained time period.

March USDA Hogs and Pigs (x 1,000 head)

Currently farrow-to-finish producers with average production are losing approximately $15.00 per head with prices around 55¢ lb lean. This is probably a short-term loss period; as, lean hog future in May are showing 68¢ lb lean.

Quick farmer arithmetic:

The Pig Crop over the last four quarters (1 year), according to USDA, was 130,733 million pigs, divided by 6.2 million breeding inventory, equals 21.08 pigs per breeding animal. Not exactly 25, is it? Average means half below 21.08. Maybe we should use a lower breeding herd number, but at 6 million, its 21.43 pigs/ breeding animal.

1 December to 1 March the breeding herd increased by 21,000 animals.

Other observations

We continue to increase production and it means as an industry we need to increase domestic consumption and increase exports.

In our opinion, to increase demand, a key part of that is producing pork that tastes better. Most surveys indicate that more marbling and redder pork leads to more satisfied consumers. Why do the Japanese target more marbling and redder pork?

We cannot count the number of times we heard that the best pork goes to Japan? The best pork is more marbled and redder. It is somehow bizarre, it’s like saying we will send the best Mercedes to USA and keep the leftovers for Germany.

The USDA and National Pork Board have proposed voluntary grades to target and identify colour and marbling – it’s the right direction. We need to produce Pork that will increase consumption. We all know Bacon (Bellies) are king in our market. Why? Taste and flavour.

We have to recognise that PIC, though it was called ‘Pigs-Into-Chicken’ at the Iowa Pork Congress, is now starting to talk about pork quality in its marketing. As the world’s largest swine genetic company, it is important for our industry that they turn from producing “the other white meat” to a more tasteful product. We only hope they can come out strongly for the new proposed grade system.

The adage, “Lead, follow or get out of the way”, comes to mind.

 

Jim Long, President-CEO, Genesus Inc.