WORLD PORK EXPO DAY 2: PEDV, profits in ’14, possible packer probs in ’14-15

(THIS POST WILL BE UPDATED DURING THE DAY WITH NEW STUFF FROM THE SHOW)

PEDV

A panel of experts discussed what’s known about PEDV this morning in a session for farmers.

So far they don’t know where it came from or how it got into a U.S. hog herd. April 15 is possibly the first incident. It’s probably moving around by truck, but that’s not for sure yet.

As yesterday, the advice to farmers seeing scours and diarrhea in their herds is to call in their veterinarian. The differences with Transmissible Gastroenteritis are subtle, but can be spotted by a vet. This disease can be devastating to young piglets, so you want to know if you have it.

There’s no cure for sick pigs other than time. It can be eliminated by herds who are exposed to it and develop immunity in the entire herd.

A veterinarian from the American Association of Swine Veterinarians said he believes it’s possible to contain and eliminate the disease in the U.S. even though that hasn’t occurred in Asia or Europe. The segregated nature of the North American industry, with farrowing generally separated from feeding and finishing, means that outbreaks can be isolated and ended.

BETTER TIMES NOW AND PROBABLY PROFITS IN ’14: WITH A WARNING

Steve Meyer of Paragon Economics said farmers are mostly profitable right now, might slip into the red this fall, but should have profitable margins in 2014.

The fourth quarter of 2013 shouldn’t be vulnerable to a packer-capacity-caused price meltdown because the 2012 drought managed to stop the U.S. herd from expanding. But now that it’s expanding again, and packers aren’t expanding and new plants aren’t being built, packer capacity problems could hit in the fourth quarter of 2014, Meyer said. If hog numbers grow 2.5 percent, and weights increase to pre-drought levels, then packer capacity in 2014 Q4 could be pushed. Anything over that amount of expansion could be a problem.

Only one packing plant is proposed for the U.S. right now, and that’s not under construction, Meyer said. A few packers could increase production at their plants, but that’s a limited increase.

And Meyer said packing plants in the Western U.S. aren’t going to expand until they know what’s going to happen with COOL. Few people believe the new COOL situation is settled and uncertainty over whether Canadian pigs will be available to U.S. packers hang over investment decisions.

CORN PRICES

Both Iowa State’s Elwynn Taylor and Paragon Economics’ Steve Meyer said the present USDA corn yield expectation of 158 bu/acre is probably too high, and the market’s guess of 140-some more likely. Today’s prices can’t be justified by near-160 bu/acre yields.

Taylor presented Robert Wisner of ISU’s estimates of corn prices of $4.55 per bushel at a 165 bu/acre crop, $4.85 at 155 bu/acre, and $6.45 at 140.

Taylor said this year seems very like 1947, which was cold and wet in the spring.

Taylor said the reasonable expectation is for sub-trend yields this year.

He also predicted 25 years of wild volatility in corn yields to replace the recently ended era of ever-growing yields. The historical pattern has alternating stability and volatility, and we’re due for volatility.

ARE HIGH BEEF PRICES GOING TO KILL DEMAND?

Meyer laid out numerous factors that are continuing to shrink the beef cow herd, and create the likelihood of even higher prices.

What impact will that have on consumers?

“Will beef cease to be a habit for anyone below the middle class?” he wondered.

PEDV

Veterinarians and other swine health experts are scrambling to understand and figure out how to combat Porcine Epidemic Diarrhea Virus. So far incidents have been found from Ohio to Colorado. None have yet been reported in Canada.

It spreads fast, had an unknown origin, and can be lethal to piglets. Mortality rates can be high in piglets, but for older pigs it just knocks them back a few days in growth as they go off feed before they shake the disease off.

The disease is believed to have appeared first in England, has been found across Europe and elsewhere, and is presently a problem in China.

Paul Sundberg of the National Pork Board said the disease is not new, but it hasn’t been seen in the U.S. before, so “we’re right on the front end of this and we’re learning every day.”

The disease can look like Transmissible Gastroenteritis, but has subtle differences. If a farmer thinks he might have it in his barn, he should call for expert help.

“Get the veterinarian out to the farm right away,” said Sunberg.

HOT PORK SALES, BUT HOLD THE BUTTS

The pork industry has banned butts. Or at least it’s trying to replace longtime terms like “pork butt” with more fancy and nice-sounding terms, like “pork shoulder roast” in place of “butt.?

Terms like “Ribeye” and “Porterhouse” are being attached to pork cuts to make them seem more valuable and the US National Pork Board thinks it will help drive up sales.

Already in recent months pork sales are up 9.9 percent, NPC officials said, so they are hopeful giving premium names to pork cuts can boost sales further this summer.

BIG ISSUES FOR WORLD PORK EXPO

It seems like the big topics at the World Pork Expo are going to be 1) gestation stalls; 2) trade; 3) trade; 4) porcine epidemic diarrhea virus; 5) Rain.

Everyone’s talking about the rain and saturation that’s been stopping and slowing Midwest planting and seeding.

National Pork Producers Council president Randy Spronk said many farmers are frustrated that they can’t complete this year’s planting.

“We’re the kind of people who like to get a job done,” he said to me a few minutes ago.

For hog producers who produce their own feed, any unseeded acreage will be a worry. But at least there’s no drought.

The biggest industry issue, according to Spronk, is gestation stalls. He said he doesn’t believe the debate is over and more public awareness of the positive sides of hog production and the dangers of a rash move into open housing could keep open the option for farmers of using gestation stall systems.

“I think we need to be very careful on outside forces (pushing for a ban of gestation stalls),” said Spronk.

“If we get down the line in 20 years and find we made a mistake . . . ”

He said the NPPC wants consumers to have “the right to choose.”

Trade’s going to be a big topic here, it’s clear, but maybe not in the COOLy way. Country of Origin Labelling is a huge deal to Canadians, but the American hog industry is also grappling with the Trans Pacific Partnership and European Free Trade talks, so COOL won’t likely dominate like it has done in some past years. And the industry would probably prefer to talk about positive opportunities exporting more to Asia and Europe rather than mull over the myriad problems of COOL, even though most U.S. retailers, packers and many producers are opposed to the labelling law.

There’s always a heavy veterinary component here, so I expect to have my ears filled with diarrhea talk in all the technical sessions I cover. It’s a big outbreak of PEDV, so no doubt lots of vet, industry and farmer interest.

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