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Hogs get to profits

Hogs get to profits
- Hog marketings tight, but corn and soybean costs still a threat. - PEDV will have mixed impact on pork industry but won't affect food safety.

PORK producers made money for a couple days last week — edging into the black early in the week but slipping back to breakeven levels late in the week — yet even that was good news for producers who have not seen profits since last summer.

Hogs were $93.25-94.46/cwt. on a lean carcass basis across the Corn Belt last Thursday, prices equivalent to a $70-71 live cash hog market and 4.6% higher than at this time last year.

The action was a consequence of lower-than-anticipated hog numbers as marketings were not only approaching their seasonal spring low but were as much as 3.0% under estimates based off the March hogs and pigs report, Feedstuffs sources noted.

"Supplies are very tight," an analyst at Allendale Inc. said in a morning note.

Steve Meyer, head of Paragon Economics, cautioned that profitability will depend on a good corn harvest and yield.

Corn stocks will become increasingly tight and expensive this fall, and there will be no early harvest of new-crop corn to ease the situation because of late plantings this spring, he said during a news conference at the World Pork Expo (WPX) last week.

The soybean situation will be even more volatile, he added.

Allendale supported Meyer's conclusion, reporting that the soybean crush pace is well above the U.S. Department of Agriculture's last forecast. Demand for meal is so strong that the trade is expecting soybean stocks "to shrink to unprecedented levels," the firm said.

Hog futures closed last Thursday at levels that would indicate breakeven to modest profitability for producers through August and losses for the rest of this year. However, as new-crop corn works its way into swine feed, futures show a return to profitability across the boards beginning next February.


Devastating disease

The big market story last week was the extent to which porcine epidemic diarrhea virus (PEDV) might become a market-moving event this fall.

PEDV was identified in mid-May from samples that were first sent to the Iowa State University Diagnostic Veterinary Laboratory in late April. The disease has never been found in the U.S. before, and it's extremely fatal to baby pigs.

The National Pork Board, in an announcement at WPX, said it approved $450,000 in checkoff funds to facilitate research into PEDV. The money will be pooled with a grant of $77,000 from the Iowa Pork Producers Assn.

The Pork Board took this action to help provide answers for pork producers as fast as possible "to help protect their herds from this devastating disease," said Conley Nelson, a producer from Algona, Iowa, and the board's immediate past president.

Dr. Paul Sundberg, the board's vice president for science and technology, noted that PEDV is common elsewhere in the world but is not a regulatory/reportable or trade-restricting disease.

However, he said the disease hits baby pigs especially hard, as producers in a number of states have discovered after finding the disease in their herds.

Sundberg said older pigs — growing pigs and sows — that contract PEDV normally recover.

PEDV appears clinically to be like transmissible gastroenteritis (TGE), which causes acute diarrhea, Sundberg said, advising producers who identify TGE-like symptoms to immediately work with their veterinarian and maintain strict biosecurity protocols.

The Pork Board's swine health committee will oversee the research in close collaboration with the American Association of Swine Veterinarians (AASV), the National Pork Producers Council (NPPC) and state associations, the announcement said.

Nelson said the research must be very targeted, with a fast turnaround, "so that we can get answers quickly.

NPPC chief executive officer Neil Dierks, speaking to reporters at WPX, said "a lot of efforts" are underway to get that information, including the development of a surveillance survey that will focus on identifying the pathway by which PEDV entered the U.S. and how it spreads.


No food safety impact

Both anxious news and good news came out of a panel discussion on PEDV during a NPPC-hosted luncheon at WPX.

Dr. Greg Stevenson, professor of veterinary diagnostic and production animal medicine at Iowa State University, reported the mortality rate that was determined from experiences in the field and said the available vaccines, while they may reduce mortality, won't prevent infection.

However, PEDV is fatal only for baby pigs, added Dr. Howard Hill, a veterinarian from Cambridge, Iowa, and NPPC vice president. For older pigs, it's "a transient disease" that causes morbidity and may set back growth in pigs but causes little mortality, he said.

PEDV is not affected by common heat treatment, which is bad news heading into summer, Stevenson said.

It is quite stable at high temperatures, noted Dr. Tom Burkgren, AASV executive director, but it does not flourish at high temperatures.

Burkgren and Hill also said PEDV can be eliminated through biosecurity to keep it from spreading to other sow herds and management that involves properly cleaning and disinfecting barns after moving out sows and one week of downtime before moving sows back into the barn.

PEDV is less stable than porcine reproductive and respiratory syndrome (PRRS), "and since we know how to get PRRS out of a house, we can get this out of a house," Hill said.

PEDV is not a zoonotic disease, which means it does not spread to people, said Dr. Lisa Becton, director of swine health and research at the Pork Board.

She reported that the board's marketing specialists are making this clear to retail customers. "It does not affect food safety, and it does not affect people," she emphasized.

Burkgren said AASV is preparing the 12-page-long epidemiological survey to which Dierks referred for producers whose animals have experienced infections. He said it is designed to find out how the virus got into the U.S. and how to keep it out in the future, how it spreads, how to keep it from spreading and how to contain and eliminate it.

Stevenson said, as of June 5, he has found 113 positive samples for PEDV from manure sent to his lab for testing, and of these, he identified the virus on 103 specific farm sites: 62 from sites in Iowa, 15 in Minnesota and the remaining from sites throughout the Midwest.


No market impact

Discussions in the markets last week centered on how so many baby pigs are dying — or will die — from PEDV that market hog supplies will become so tight this fall — after four-month growouts — that prices will be explosively strong.

However, in an interview with this column, Stevenson said this view overlooks critical factors.

First, he said, PEDV has been identified on just 26 breed-to-wean farms of the 103 sites, so the virus is mostly on growouts, where pigs normally recover.

More important, he said, growing pigs and sows shed the virus, and once shed, growing pigs recover, and sows become immune and pass that immunity on to their next offspring.

After moving the sows and cleaning the barns, "the virus is gone," Stevenson said. "This should not impact markets at all."

WPX is the world's largest swine-specific event and was held June 5-7 in Des Moines, Iowa.


Market roundup

Elsewhere in the livestock and poultry markets last week, cattle did not trade in sufficient volume to establish prices through Thursday and, at week-before levels, were $124.00-126.00 through the Plains, 2.5% higher than year ago.

Analysts said beef demand has eroded rapidly since the Memorial Day weekend, and beef wholesale prices, after increasing and setting new record highs for four straight weeks heading into the holiday weekend, have slid for the two weeks since then. The Choice cutout was $203.63/cwt. last Thursday, down $4.92 for the week and down $7.74 from its record high last month.

The chicken markets were a bit unsettled last week as breasts and breast meat weakened because quick-service restaurants have their needs satisfied for the remainder of this month and were slowing their promotions of new chicken items, sources said.

Chickens were $1.12-1.17 and $1.05-1.13/lb. in the eastern and midwestern regions last Thursday, unchanged from the week before and 32.4% higher than year ago.

Breasts were $1.27-1.34/lb., unchanged to down 3 cents from the week before but 47.5% more than year ago, and breast meat was $1.78-1.97/lb., down 5-16 cents from the week before but 53.7% more than year ago.

The egg markets continued to collapse and fell 19 more cents to 94-97 cents and 85-87 cents/doz. for large-sized eggs delivered to eastern and midwestern store doors last Thursday. Prices have now slid 38 cents from last month and were 9.5% lower than year ago.

Sources said a number of major supermarket systems pulled eggs from their ads, and Mexico stopped importing U.S. eggs when prices rose so high last month. Now, supplies are far greater than demand, sources said, with one suggesting that there are 5 million too many hens in the nation's flock.

The turkey markets were unchanged at 95 cents to $1.01/lb. for hens and 92 cents to $1.01/lb. for retail-sized toms last Thursday, 6.7% and 8.0% under year ago.

Fresh tom breast meat remained at $1.55/lb., 17.6% under year ago.

Volume:85 Issue:23

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