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8 DECEMBER 13, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER MARKETS HOGS | PRODUCTION OUTLOOK Weanling prices rebound as feed price dips Hog futures recover | Producers are willing to reinvest in their operations BY ED WHITE WINNIPEG BUREAU Anyone expecting to find depressed farmers and a morose outlook at Manitoba Hog and Poultry Days would have been surprised. The show wasn’t deserted and lots of farmers wandered the aisles of the trade show, looking to spend money on their recently money-losing operations. “If there’s an economic benefit at the end of the day, and a quick return on investment, people are definitely willing to consider it,” said Rick Bergmann of Paradigm Agri-Solutions, who brought several U.S. representatives for products he supplies to Manitoba hog farms. Bergmann said weanling and forward hog prices are back to profitable levels, so the farmers who are still in business have probably survived the recent calamitous financial downturn. “The ones who are in it today are the ones who are going to be here tomorrow,” said Bergmann. Spring and summer Chicago lean hog futures don’t offer big profits, but they offer acceptable returns for farmers to restock their barns with feeder pigs when combined with feed prices that are much lower than in July and August. CROP PRODUCTION | ESTIMATES Total canola supply steady after StatsCan tweaking MARKET WATCH D’ARCE McMILLAN Statistics Canada’s November production estimates are the last crop report of the year but not the last word on the size of the crop. Canada’s place as the world’s largest exporter of canola means the numbers on that oilseed are always closely watched for their impact on the markets. This year, based on the interviews with farmers that form the basis of the report, the canola production number was pegged at 13.31 million tonnes, down from the September estimate of 13.359 million tonnes. The number was within the range of analysts’ pre-report forecasts but near the bottom of the range. Canola futures jumped a little higher following the report. The November report gave substance to the opinion that the September report didn’t catch the damage caused by the terrible wind storms that blew swaths around at harvest time. At first glance, the decline of 49,000 tonnes from the September produc- I think the ones that are still in the business are used to these wild fluctuations in economic cycles and some are still hanging on by their fingernails, but they find strategies to survive. DARIN KUHLOW CONTINENTAL PLASTICS That has caused weanling prices to skyrocket, with prices surging to $50 to $65 per weanling from a low of less than $10. Most producers can make a profit with a mid-$30s price. Weanling hog producers suffered the most when the downturn hit. The first response of many U.S. hog producers to the Midwest drought was to empty their barns so that they didn’t have to feed pigs. That pushed prices down for slaughter animals, but the lack of demand for weanlings caused prices in that sector to crash. However, Chicago hog futures now look profitable, and there’s a scramble to fill barns. There are fewer NOVEMBER CROP ESTIMATE Statistics Canada’s final production report of the year increased the wheat, lentil, pea and corn crop estimates but cut barley, oats and canola. 2011 September November (000 tonnes) final 2012 (est.) 2012 (est.) All wheat 25,228 26,733 27,205 Spring wheat 18,019 18,641 18,845 Durum 4,172 4,398 4,627 Winter wheat 3,097 3,694 3,733 Canola 14,608 13,359 13,310 Corn for grain 11,359 11,576 13,060 Barley 7,892 8,591 8,012 Soybeans 4,298 4,280 4,930 Dry peas 2,502 2,743 2,830 Oats 3,158 2,939 2,684 Lentils 1,523 1,323 1,473 Flax 399 537 489 Rye 241 206 337 Mustard seed 130 n/a 119 Canaryseed 129 n/a 125 Coloured dry beans 116 n/a 159 Dry white beans 46 n/a 116 Sunflower seed 20 n/a 87 Chickpeas 86 n/a 158 Summerfallow (000 acres) 11,763 4,485 4,485 Source: Statistics Canada | WP GRAPHIC tion report reinforces the belief that canola stocks by the end of the crop year will likely be in short supply. However, you also have to look at what Statistics Canada did to the 2011 canola crop number. You see, the final November crop production report isn’t really the final number. It is the best information available based on interviews with farmers and satellite monitoring data. Industry experts say spring and summer hog futures may encourage farmers to restock barns. | FILE PHOTO weanlings for feeder barn operators to buy because some producers have liquidated their sows and some have gone bankrupt. Eric Aubin, who oversees breeding stock sales for DanBred North America’s Quebec and Manitoba markets, said many farmers have faced grave financial challenges in Quebec and Manitoba, but Manitoba’s weanling producers seemed to have suffered most. Quebec’s operations are mainly farrow-to-finish, so they didn’t face the same collapse. Demand for breeding stock there has continued, although there was a weak period in the midst of the However, Statistics Canada also keeps track of exports and domestic use and issues stocks reports three times a year. From that it can sometimes be deduced that the amount consumed is greater than the amount produced, which can’t happen, so the original production number must have been wrong. Statistics Canada then revises its production number. In November of last year, the agen- drought-induced crop price rally. “Our company is doing quite well,” said Aubin. “We have seen some reduction, and we sold less breeding stock for awhile, but each producer has his own set of concerns and his own way of getting through the bad times. Darin Kuhlow of Continental Plastics, a Wisconsin company that provides boar semen extender, said farmers won’t back away from products like his, even if they are having money trouble. He shared Bergmann’s view that the farmers who have survived to this cy pegged the canola crop at 14.165 million tonnes, but in the September production report this year it revised it upward to 14.493 million tonnes. And in this latest report, it increased it again, by 115,000 tonnes to 14.608 million. It also tweaked the 2010 crop higher, increasing it 16,000 tonnes to 12.789 million tonnes. That probably means the carry-in to 2012-13 was larger than had been assumed when Agriculture Canada did its supply, demand and carryout forecasts. So while the production estimate was trimmed, the carry-in is probably a little larger, which means the total available canola supply for this crop year is probably little changed and therefore has little real impact on prices. As for other crops, Statistics Canada increased its estimate of the spring wheat, durum, rye, pea and lentil crops and decreased its estimate of the barley, oats and flax crops. The changes had little effect on markets for the major grains, but the increases in peas and lentils put downward pressure on prices, especially for green lentils and yellow peas because they accounted for the increases. Luckily, growers are in a strong position with good revenue from other crops and they can ration sales so as not to overload the system. Follow D’Arce McMillan on Twitter @darcemcmillan. point will carry on. “I think the ones that are still in the business are used to these wild fluctuations in economic cycles and some are still hanging on by their fingernails, but they find strategies to survive.” Bergmann said it may seem odd that farmers who have so recently survived a historical downturn would consider reinvesting in their farms, but farmers want to farm for as long as they can, regardless of profitability. “All they want to do is make a living, and they hope to find a way to do that,” he said. BEEF TRADE | BRAZIL EXPORTS BSE protein in Brazilian beef disrupts trade TOKYO/BRASILIA (Reuters) — Japan says it has halted beef imports from Brazil after the South American nation notified the World Animal Health Organization (OIE) of the discovery of the protein believed to cause BSE. Russia said it too was considering suspending Brazilian beef imports. Brazilian officials said Dec. 7 the pasture-fed animal that died in Parana in December 2010 did not have BSE. The official OIE report confirmed that the animal did not die of BSE and said it may have had an atypical case of the disease, meaning one arising spontaneously from a genetic mutation that can arise in older cattle. The animal was 13 years old and had been kept for breeding purposes. Japan imported 1,435 tonnes of Brazilian beef in 2011, accounting for 0.3 percent of total beef imports, Japanese agriculture ministry data showed. The OIE has maintained Brazil’s status as a country with an insignificant risk of BSE, Brazilian officials said, adding Brazil would pursue legal action if necessary against any importer trying to exploit BSE claims to block imports of Brazilian beef.
SOUTH AMERICA | CROP OUTLOOK Argentine corn, soy seeding hampered by excessive rain BUENOS AIRES, Argentina (Reuters) — Key Argentine corn and soybean areas have been drenched by storms this month, keeping some fields flooded and delaying planting while fusarium moves in on wheat fields. Satellite weather maps show Argentina’s top grain province, Buenos Aires, received up to 200 millimetres of rain since Dec. 1, turning prime corn and soy fields into unplantable mush. The country is the world’s second largest corn exporter, third largest CANFAX REPORT FED PRICES SET NEW HIGH The weighted steer average was $118.60 per hundredweight, up 63 cents, and heifers were $118.20, up $1.28. Dressed sales were mostly $198 delivered, but a handful traded slightly higher. Average Alberta fed steers and heifers set new annual highs for the second consecutive week. U.S. buyer interest was light, and Saskatchewan cash trade was not significant. Sales volume totalled 14,807 head, up 10 percent from the previous week. The Alberta cash-to-futures basis narrowed significantly to a seasonally strong -$6.49 from -$9.10. Weekly fed cattle exports to Nov. 24 fell 35 percent to 7,259. Packers have procured adequate inventory to carry them through the holidays but will want to secure additional inventory to start the new year. WP LIVESTOCK REPORT HOGS RISE U.S. packers paid more for hogs last week, but bids retreated from the midweek highs as processing margins turned negative and pork prices topped out. Packers slowed their Saturday kill and will likely try to pressure hog prices lower this week to regain profitable margins. Iowa-southern Minnesota hogs delivered at packing plants reached as high as $65 US per hundredweight during the week but dropped back to $62.50 per cwt. Dec. 7, up from $60- $61 Nov. 30. The U.S. composite pork carcass cut-out value climbed to almost $86 but drifted back to $85.01 by Dec. 7, up from $84.74 Nov. 30. U.S. slaughter for the week rose to 2.36 million from 2.40 million in the previous week. That was up from 2.33 million a year ago. BISON STEADY The Canadian Bison Association said grade A bulls in the desirable weight range sold at prices up to $3.85 Cdn per pound hot hanging weight. Grade A heifers sold up to $3.75. Animals older than 30 months and those outside the desirable weight soybean exporter and a significant wheat exporter. However, growing conditions in Brazil, which will become the world’s largest soybean exporter this year, are generally favourable. Argentina, which curbs overseas wheat and corn shipments to ensure domestic food supplies, will trim its wheat export quota to 4.5 million tonnes from a previous six million because of a smaller than forecast harvest, La Nacion newspaper reported. There was no government confir- COW PRICE RISES Weekly western Canadian cow slaughter to Dec. 1 was the largest reported this year. Strong local and U.S. packer demand was noted as D1, D2 cows averaged $67.08 per cwt., up $1.45. U.S. utility cow prices have been at a $8-$9 premium over western Canadian D1, D2 cow values for the past nine weeks. Rail bids were steady to $1 higher at $130-$135.Butcher bulls were $73.23, down $1.30, which established a new annual low. Weekly non-fed exports to Nov. 24 rose six percent to 9,238. Increased domestic slaughter and large exports will take pressure off the non-fed pipeline. FEEDERS LOWER Rising barley prices pressured feeder cattle prices. Steers and heifers 900 pounds and range may be discounted. HEAVY LAMBS SEE PRESSURE Beaver Hill Auction in Tofield, Alta., reported 576 sheep and 142 goats sold Dec. 3. Wool lambs lighter than 70 lb. were $125-$140 per cwt., 70-85 lb. were $119-$131, 86-105 lb. were $110- $120 and 106 lb. and heavier were $100-$114. Wool rams were $47-$70 per cwt. Cull ewes were $43-$57 and bred ewes were $120-$200 per head. Hair lambs lighter than 70 lb. were $122-$136 per cwt., 70-85 lb. were $115-$128, 86-105 lb. were $100- $115 and 106 lb. and heavier were $90-$100. Hair rams were $61-$87 per cwt. Cull ewes were $51-$71. Good kid goats lighter than 50 lb. were $140-$190. Those heavier than 50 lb. were $145-$195 per cwt. Nannies were $63-$86 per cwt. Billies were $95-$127.50. Ontario Stockyards Inc. reported 1,952 sheep and lambs and 52 goats traded Dec. 3. Well-fed light lambs sold at a premium while heavy lambs sold $8-$10 cwt. lower. Sheep traded $5 cwt. higher. Light goats sold in premium ranges; all others were steady. MARKETS THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 13, 2012 mation of the report, but wheat farmers said they expected the cut in export licences because of the flooding and outbreaks of fusarium. “The rains are making (wheat) harvesting difficult, with losses to both yield and quality,” said Eduardo Sierra, climate adviser to the Buenos Aires Grains Exchange. “Some corn fields are having to be replanted or abandoned.” More rain is expected. Weather forecaster Somar said heavy rain is also expected in Brazil’s southern grain producing states, heavier were the only class trading above year ago levels. The margin between 850 lb. steers at $130.54 per cwt. and 950 lb. animals at $127.13 is now the narrowest this year. Weekly auction volume totalled 53,319, down 16 percent. Weekly feeder exports to Nov. 24 rose 45 percent to 1,758 head. Feeder cattle futures rose late in the week, but that will likely result in weaker basis levels. Demand for choice packages of cattle should remain strong, but discounts on plainer and second cut feeders will likely increase. BRED COWS IN DEMAND Some large bred cow dispersals and Heavy rain in parts of Argentina and Brazil has hampered seeding and made pastures difficult for livestock. | REUTERS PHOTO helping what is expected to be a record soybean crop germinate. Soy planting is complete in top one-owner bred heifer sales saw strong buyer support. Benchmark, young, reputable cows saw prices up to $1,700 per head. Average bred cow values were about $150 per head lower than the same week last year. Bottom-end bred heifers are being placed in feedlots and any mature or blemished cows are going to slaughter. U.S. BEEF PRICE FALLS Choice and Select cut-out values traded $1.90 and $1.20 US lower, respectively, on light to moderate demand and offering. U.S. slaughter in the two weeks since American Thanksgiving was 9 growing state Mato Grosso, though it is still unfolding in parts of the south after an unusually dry November. down from last year at the same time, but packers were unable to maintain beef prices. Heavy carcass weights are partly offsetting the reduced slaughter number. Weekly Canadian cutout values to Nov. 30 were steady to $2.53 Cdn higher. AAA cutouts were $175.75 per cwt. and AA was $170.01. This cattle market information is selected from the weekly report from Canfax, a division of the Canadian Cattlemen’s Association. More market information, analysis and statistics are available by becoming a Canfax subscriber by calling 403- 275-5110 or at www.canfax.ca. EASE AND CONVENIENCE Get the Genuity® Roundup Ready® canola advantage of effective weed control across a wide window of growth stages, a wide range of environmental conditions and with 50% less water usage than the LibertyLink® system.* Capture the full yield potential of today’s elite canola genetics. www.genuitycanola.ca *Monsanto Field Scale trials as of November, 2011. Always follow grain marketing and all other stewardship practices and pesticide label directions. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. LibertyLink® is a registered trademark of Bayer. © 2012 Monsanto Canada, Inc
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