11-16 news: Swine economist: Hog farmers' loss hits record levels
“Hog farmers are losing more money than they did in what they thought was a once-a-lifetime crunch just a decade ago,” Plain said. He spoke at the annual Swine Institute held in Columbia by the Missouri Pork Association and the MU Commercial Agriculture team.
“From October 2007 to October 2009 the average hog was marketed at a loss of $19.18 per head,” Plain said. Farmers lost money raising hogs in 23 of the last 25 months.
“In the last 25 months through October, hog producers lost $4.6 billion,” he said. The 1998-99 disaster lasted 27 months and claimed $4.75 billion in hog-farm equity. Losses in the current crisis topped that number Nov. 13.
Plain’s outlook for 2010 offered little optimism. Live-hog prices next year will average in the range of $43-47 per hundredweight. That’s based on the Iowa-Minnesota negotiated live-hog base price. That outlook is up $3-6 from 2009.
However, the cost of producing 100 pounds of pork now averages $52. Last summer, when corn prices were higher, the cost of production ran $62.
High feed costs, world recession and a glut of pork makes this price crunch severe, Plain said. In the 1998-99 price crisis, an overproduction of hogs sent prices below a dime a pound.
This time farmers face moderately low market prices but record-high production costs.
The hog-farm price squeeze is likely to get worse before it gets better. “Bankers will begin forcing the issue,” Plain said. “Under their financial rules, bankers don’t have much wiggle room. They will not be renewing many hog loans.”
Farmers are a victim of their own efficiencies. As they sent more sows to slaughter, the pounds of pork continued to increase. Production per sow is up 3.5 percent this year, Plain said.
Weak consumer demand just adds to the pork producers’ problems. “We are in a recession that has lasted longer than the Great Depression,” Plain said. “Weak demand is felt not only in the U.S. but worldwide.”
About 20 percent of the U.S. pork goes for export.
Adding to the drop in demand has been a mislabeling of the H1N1 flu as “swine flu.” The non-swine flu cost producers an estimated $6 per hundredweight, Plain said. China, a large buyer of U.S. pork, banned imports on first reports of “swine flu.”
“Recent trade talk indicates China will lift that ban,” Plain said. However, resuming trade will not be enough to lift prices to profitable levels.
Year in, year out for 80 years, pork grown in the United States increased 1.5 percent per year. There were fluctuations, but the trend line was steady, Plain said.
The dilemma of too many pigs and not enough buyers will be solved only one way, Plain said. “Farmers must cut production 15 percent from the peak for prices to return to break-even.”
Farmers have sent sows to slaughter; however, they kept more replacement gilts, defeating the potential cut in pork.
Since voluntary reductions have not met the need, it may be up to bankers to turn the tide. “Hog farms will be going out of business,” Plain said. “Then production will drop and prices will begin to return.”
A new survey shows the top 25 sow operations in the country have reduced by 6.5 percent, almost twice the national average cut of 3.4 percent. Smithfield, the largest U.S. pork producer, cut 9 percent, Plain said.
Even a cool summer hurt farmers’ plans to cut pork production.
During hot summers hogs go to market at lighter weights because of lower feed efficiency. “This summer, cool weather proved good for pig growth,” Plain said. “On average, market hogs were 6 pounds heavier than a year ago.”
Source: University of Missouri Cooperative Media Group
Ruiz Foods' Tornados, Stewart-Haas Racing team upAVONDALE, Ariz. - Tornados, a brand of Dinuba, Calif.-based Ruiz Foods, Inc., announced a partnership with Stewart-Haas Racing in a press conference Saturday at Phoenix International Raceway.
Tornados, the bold taste of savory meats, real cheeses and zesty sauces rolled in a crispy seasoned crust, will adorn Ryan Newman’s No. 39 Chevrolet Impala as a primary sponsor for five Sprint Cup races in 2010, and when not serving as a primary, will take associate sponsor status on the car’s lower-rear quarterpanel. Teammate Tony Stewart will also carry Tornados on a portion of the lower-rear quarterpanel of his No. 14 Office Depot/Old Spice Chevrolet Impala. The agreement extends through the 2011 season, where Tornados will again be the primary sponsor of Newman and the No. 39 team for five Sprint Cup races.
“NASCAR is the ideal platform for our Tornados brand to extend its reach to the consumer,” said Bryce Ruiz, president and CEO of Ruiz Foods. “Tornados have been available on roller grills in convenience stores for more than five years, but now they can also be found in the frozen food section of grocery stores nationwide. Perfect for families who enjoy the convenience of a hot, ready-to-eat meal solution that tastes great, Tornados offer value and quality ingredients that are easily prepared in the oven or microwave.”
“We’re very proud to partner with Tornados,” said Stewart, who in his first year as a driver/owner has notched five wins for Stewart-Haas Racing, including the non-point NASCAR Sprint All-Star Race in May. “They’re new to the sport and we aim to make their entry into NASCAR a positive one that will grow their business, and ultimately, grow their involvement within the sport and Stewart-Haas Racing.”
The No. 39 Tornados Chevrolet will debut in March at Atlanta Motor Speedway and will return in April at Phoenix International Raceway, in July at Daytona (Fla.) International Speedway, in August at Michigan International Speedway in Brooklyn before culminating its season run as Newman’s primary sponsor with an October visit to Martinsville (Va.) Speedway.
“Bold Is How We Roll” is the tagline for Tornados, and the venues where the brand will be featured on Newman’s No. 39 machine will augment that slogan nicely. Newman has a total of three wins and 15 poles at the five venues where Tornados will serve as his primary sponsor (Atlanta – seven poles; Phoenix – four poles; Daytona – one win; Michigan – two wins, one pole; Martinsville – three poles).
“In this sport, we’re always on the go, whether we’re at home or at the track,” said Newman, winner of the 50th running of the Daytona 500 in 2008. “Tornados is an ideal partner for us because a lot of times we have to eat quick, especially at the track. Now, we don’t have to sacrifice taste for speed. They’re a welcome addition to Stewart-Haas Racing and we look forward to many successful years with them.”
Tornados offer variety and convenience, contain zero grams trans fat, and are available in a wide variety of innovative flavors that are perfect for breakfast, lunch, dinner, a snack or desert.
Source: Ruiz Foods
JBS to conclude private share saleJBS SA expects to conclude a $2.5 billion private share sale in its U.S. business by the end of year and price a $2 billion initial public offering for the unit in January.
JBS will give presentations to investors in the U.S. between Jan. 4 and Jan. 8 before setting the price for the public share sale in the week of Jan. 11, CEO Joesley Batista said today in a story on Bloomberg.com.
Sao Paulo-based JBS is raising cash to pay for the $800 million acquisition of U.S. poultry producer Pilgrim’s Pride Corp. and fund a $2 billion global distribution network. The company controls about 10 percent of the world’s beef processing after Batista made about 30 acquisitions since 1993, including Swift & Co. in 2007 and two Smithfield Foods Inc. units.