Heat Takes a Toll

Last week the temperatures in Minnesota were very hot – with heat indexes well above 100. I can't remember a time when we've had consecutive heat coupled with high humidity for such an extended period. A day or two with temperatures above 90 degrees are not uncommon, but then we usually get back to normal temps in the 80s.

The extreme heat had a big impact on livestock, too. Unfortunately, some livestock died even though producers did everything they could to keep their animals as comfortable as they could. If the average consumer only knew how much work was put into making sure animals were comfortable during extreme weather, they would truly understand that producers are passionate about taking care of their animals.

From an historical perspective, this summer compared to last (2010) has been much warmer, especially east of the Mississippi River. North Carolina had a stretch of nearly 100-degree days that lasted nearly 60 days straight. Conception rates, farrowing rates and boar fertility generally slip during these stretches of extreme heat. It's way too early to say how much this year's extreme heat will affect marketing numbers going forward – in late March and April at the earliest.

And, of course, the fall often brings the dreaded porcine reproductive and respiratory virus (PRRS). If lower, weather-related conception rates combine with a bad PRRS season in the late fall/early winter months, we could see market hog numbers in 2012 come in under the previous year. It is something to keep an eye on over the next few months.

Pork Export Update – AgStar hosted a webinar this week concerning pork exports. I'm giving Brett Stuart from Global Agri-Trend a plug here because his information on exports is some of the best I have seen. His presentation provided very good, factual information about export opportunities for the pork industry (see Figure 1 & 2). Stuart spent a good portion of his time focusing on the opportunities in China. For weeks we have been hearing rumors that China plans to buy more U.S. pork. For perspective, here are examples of July pork prices throughout the world:

• China prices are at $135/cwt.
  
• Russia prices are at $145/cwt.
  
• U.S. live hog prices are at $70/cwt.
  
  The per-head difference, if pigs were sold at 260 lb., would be the China producer would receive $169 more than a U.S. producer and a Russian producer would receive $195 more. These numbers are a little startling to see. It has also been reported that China is releasing some pork reserves to curb inflation, but Stuart pointed out that the release represents just one-tenth of 1% of the total pork consumed in China, so it will not curb much inflation.
  
  Figure 2 shows that average pork prices historically increase toward the end of the year in China. Pork prices could go even higher than current rates unless China buys pork to curb rising prices. This is certainly worth watching. Added pork sales to China could help U.S. pork prices in the fall.
  
  The Chinese are talking about expanding another 2-3 million sows, which is 40% of their entire pork production. I have no idea how fast they could do this, but my best guess is it will be hard for them to get much of this ramped up in 2012. (Click here for a current look at sow expansion trends in China.) China is a difficult country to depend on as a trade partner, but this could be a very good opportunity for the U.S. pork industry. Stay tuned.
  
  Mark Greenwood
  Swine Industry Consultant
  Contact Greenwood at mgreenw@agstar.com