At The Close 2014 exports mixed PRODUCERS Livestock News Vol. 53, Number 1 “Strength through cooperative marketing” January 2015 Iowa pig farmer chosen as an industry rep in nationwide search the heartache of PEDV. She’s there, along with other employees, to provide care to newborn piglets—drying them off, keeping them warm and making sure they can find milk. “I see every day as kind of a puzzle with your sows farrowing--how many pigs everybody has, what size the pigs are, getting the right pigs on the right sows and getting them all milked,” she says. “There’s so many things going on and you have to piece everything together just right to make it work. I love that challenge of it.” BY BETHANY BARATTA t may come as a surprise that the Iowan chosen to represent the pork industry in the United States didn’t grow up on a farm. She didn’t grow up in Iowa, either. Erin Brenneman grew up in a suburb of Chicago. But since meeting husband Tim in college at Iowa State University, Erin has gained a broad understanding of the pork industry; it’s been her life for the past 10 years. Chosen recently as a winner of the U.S. Farmers and Ranchers Alliance’s (USFRA) Faces of Farming and Ranching program through a nationwide search, Brenneman will serve as a farmer representative of the pig industry. I Face for industry A whole new world So how did the city girl become a face for agriculture? Erin says she asked a whole lot of questions when she returned to the farm, got involved in the farm’s activities and shared that knowledge with friends, family, even her hairdresser. “I remember coming back (to the Brenneman farm) thinking, oh, it’s a whole new world that people don’t know about,” Erin recalls. “It was neat. It was moving, honestly, to think of all the things that go on on the farm that people like me, from the city, will never know or get to experience.” She earned her animal science degree, married Tim and moved to southern Iowa to be closer to the family’s farrow-tofinish farm. The farm consists of just over 20,000 sows over three sites. The home farm is located in southeast Iowa with two other sow farms in Missouri. At first, she followed Tim around on the farm to get a Erin Brenneman, a pig farmer in southeast Iowa, was recently chosen as one of the U.S. Farmers and Ranchers Faces of Farming. PHOTO/GARY FANDEL. sense of the farm’s activities. She helped power wash barns, load pigs that were ready for market and even helped with the family’s field work. But it was a conversation with her father-in-law and a trip to the farrowing house that Erin found her place on the farm. “My father-in-law (Rob Brenneman) said to me, ‘Do one thing better than every- body else,’ ” Erin says. And that’s where her focus on the farm’s farrowing house began. “I explain it to people as the maternity ward for pigs,” she says. In the farrowing house, she watches over sows, assisting sows that are having complications giving birth. She’s witnessed the miracle of birth and Erin said she knew of the USFRA’s Faces of Farming and Ranching program, but when the application asked for her number of followers on Facebook and Twitter, Erin decided to take a year to build those connections. A year later, she filled out the application. Erin had more followers and engagements on social media this time, and she was ready. She created a short video about her involvement on the farm and submitted the application. Erin was notified that she was one of eight finalists. A phone interview with last year’s Faces of Farming and Ranching, online voting and further review from the contest’s judges narrowed the pool to five winners of the program. In her role as a Face of Farming, Erin will spend this year helping consumers and others understand what happens on the family’s hog farm. She’ll help clear up misconceptions, communicate about chores to her online audiences and continue to work in the farm’s maternity ward. FARMING PAGE 3 Risk management still plays key role in hog industry BY DARCY MAULSBY The swine industry is breathing a sigh of relief, thanks to the reduced impact from Porcine Epidemic Diarrhea (PEDV) this winter. Producers are now shifting into expansion mode, as indicated in the latest U.S. Department of Agriculture’s quarterly hogs and pigs report, which revealed no major surprises. “With breeding herd additions higher, sow utilization trending higher and a return to 2013 productivity levels, many factors are pointing toward expansion in the industry,” said Lee Schulz, an Iowa State University Extension livestock economist. “None of this is guaranteed, but current estimates SCHULZ are that we’re going to have more sows farrowing, and therefore more pigs and more pork pounds that show up beginning around the latter part of next year.” The inventory of all hogs and pigs totaled 66.1 million head, up 2 percent from a year ago, according to the December 2014 hogs and pigs report. The breeding inventory, at 5.97 million head, grew 4 percent from last year and 1 percent from the previous quarter. The market hog inventory, at 60.1 million head, rose 2 percent from last year and 1 percent from the previous quarter. “The impetus for growth has been the historic returns pork producers enjoyed in 2014,” Schulz said. “Given current mar- ket expectations it appears that returns will stay in the black in 2015.” Sows farrowing during the September-November 2014 period totaled 2.87 million head, up 3 percent from 2013. In this same period the 2014 pig crop, which reached 29.4 million head, shot up 4 percent from 2013. “In the last two quarters the U.S. has added more than 100,000 head to the breeding herd inventory,” Schulz said. “Given the farMARGINS PAGE 3 Lower volumes of U.S. beef and pork exports were reported in November, but the value of these exports were on record pace, according to data released recently by the U.S. Department of Agriculture (USDA) and compiled by the U.S. Meat Export Federation (USMEF). The cumulative 2014 volume totals were still higher year-over-year, with January-November beef exports up 2 percent to 1.1 million metric tons. Pork exports were also 2 percent higher at just under 2 million metric tons, the report said. With December totals still to be recorded, beef exports already set a new full-year value record of $6.49 billion (up 16 percent year-over-year). Pork export value through November ($6.13 billion, up 11 percent) is on pace to break the 2012 record and already exceeds the 2013 year-end total, the report said. Third strain of PEDV U.S. researchers have identified a new strain of a hog disease that has wiped out millions of baby pigs, a sign the virus will keep mutating as producers work to contain it, according to a Reuters news report. A third strain of Porcine Epidemic Diarrhea virus, or PEDV, was detected in a Minnesota hog herd and found to be at least as virulent as an original strain that emerged in the United States in early 2013, said Douglas Marthaler, assistant professor of veterinary population medicine at the University of Minnesota. Higher egg prices The new year is bringing higher egg prices across the United States as California starts requiring farmers to house hens in roomier cages. The new standard, backed by animal rights advocates, has been criticized by chicken farmers in Iowa, Ohio and other states who sell eggs in California and will have to abide by the same requirements. California is the nation’s largest consumer of eggs and imports about one-third of its supply. Jim Dean, president and CEO of Centrum Valley Farms in Iowa and Ohio, told Fox News that one of his buildings that holds 1.5 million hens is now about half full to meet California’s standards and another building may have to be completely overhauled. Farmers in cold climates will have to install heaters to replace warmth formerly generated by the chickens living close together, Dean said. “You’re talking about millions upon millions of dollars,” he said. 2 Producers Livestock News January 2015 Producers Services Directory BY DARCY MAULSBY General Office Delivery address: 4809 S 114th St, Omaha, NE 68137-2308 Mailing address: PO Box 45978, Omaha, NE 68145-0978 (402) 597-9189 or (800) 257-4046 FAX (402) 597-9505 Email [email protected] Internet www.ProducersLivestock.net Ext. 1102 Aric Ellinghuysen, IT Director EXt. 1106 Marketing staff Ext. 1104 Mick Jackson, Country Marketing Ext. 1100 Rick Keith, President Mike Sila, Vice President Dave Nickelson, Treasurer Deb Engler, Secretary Ext. 1111 Ext. 1105 www.ProducersLivestock.net PLCC Financial Services Commodity Services Tim Meyer Sr Vice President Financing for Livestock - Operating - Machinery Real Estate www.ProducersCredit.com John Nelson Vice President Brokerage Services and Consulting on Hedging Options - Hedge Contract Programs Branch of Producers Commodities, LLC www.ProducersCommodities.com Tim Meyer Mobile Millard Hanson Mobile Darrell Ziola Mobile Keith Meiergerd Mobile Ryan Power Mobile Tina Fettes Georgia Abboud Gaye Nusz 800-950-7522 712-251-4071 800-950-7522 402-690-5114 800-950-7522 402-657-0598 800-950-7522 402-432-8292 800-950-7522 402-507-7790 Ext. 1115 Ext. 1107 Ext. 1117 Ext. 1108 Ext. 1110 Ext. 1101 Ext. 1114 Ext. 1118 Office (712) 274-0539 or (800) 831-5936 Evening Mobile (712) 251-3498 E-mail Kyle Krager (712) 946-7316 Fax (712) 274-4166 [email protected] office (800) 831-5936 evening (712) 384-2504 mobile (712) 251-9477 office (800) 831-5936 evening (712) 546-6106 mobile (712) 540-0706 office (800) 831-5936 Carl Johnson Twila DeRocher Producers Livestock Services Producers Beef Programs Country Direct Feeder Cattle Sales - Feeder Cattle Buying - Fed Cattle Sales - www.PremiumBeef.net Denny Thoreson Soldier, IA home mobile fax (712) 884-2439 (712) 898-7568 (712) 884-2251 Bob Pallardy Williamsburg, IA office mobile fax (319) 668-1505 (319) 330-1315 (319) 668-9345 Vance Whitehill Stapleton, NE home mobile fax (308) 636-2410 (308) 636-8114 (308) 636-2910 Gailen Gage Lakefield, MN home mobile fax (507) 662-6219 (612) 840-2317 (507) 662-5047 Terry Jones Omaha, NE home mobile fax (402) 289-1107 (402) 649-0607 (402) 289-0832 Paul Wichmann Rapid City, S.D. mobile fax (605) 354-1642 (605) 884-0110 Ed Heusinkvelt Lexington, NE office mobile fax (308) 324-6095 (308) 325-0227 (308) 324-6095 Ron Kasselder Sioux Falls, S.D. home mobile fax (605) 361-1157 (605) 310-5733 (605) 271-0478 Steve Maloley Kearney, NE office mobile fax (308) 338-0827 (308) 325-0165 (308) 338-0827 Mark Johnson Centerville, S.D. home mobile fax (605) 563-2875 (605) 212-2387 (605) 563-2875 Mike Million Oregon, MO home mobile fax (660) 446-2254 (308) 325-5274 (660) 446-2254 Claude Forbes Woonsocket, S.D. home mobile fax (605) 796-4353 (605) 350-0366 (605) 796-1410 Scott Hodne Manning, IA office mobile fax (712) 653-2557 (712) 299-7696 (712) 653-2633 Slim Cook Cody, WY mobile office fax (307) 272-2024 (307) 587-1965 (307) 587-1965 Dave Bryan Windsor, MO home mobile fax (660) 647-2900 (660) 815-0815 (660) 647-9981 Ron Wilson Lander, WY home mobile fax (307) 332-2359 (307) 349-4350 (307) 332-2359 Micah Coston Maryville, MO mobile (660) 254-0328 Mike V Million Marshall, MN mobile fax (507) 829-1394 (507) 401-3025 Luke Stevens Marshall, CA mobile fax (707) 953-4879 (415) 663-8183 Steve Rasmusson Epworth, IA home mobile fax (563) 876-3263 (563) 590-1725 (563) 876-3651 Producers Pork Programs Richard Ellinghuysen Vice President Premium-Based Marketing - Supply Agreements www.PremiumPork.net Richard Ellinghuysen Omaha, NE office mobile fax (800) 257-4046 (402) 657-6954 (402) 597-9505 Settlements (Sioux City office) Shirley Frank office Connie Sponder fax (800) 318-5619 (712) 274-0741 Harper, IA office office fax (877) 461-0897 (641) 635-9003 Sioux City, IA office office fax (800) 318-5619 (712) 274-0741 Dick Baker Keota, IA mobile (319) 461-0897 Jason Goodwin Correctionville, IA mobile (712) 389-0228 Jon Baker Harper, IA mobile (319) 461-5900 Bill Nielson Chancellor, S.D. mobile (605) 310-4664 Noland Johnson Harper, IA mobile (641) 990-0467 Jeremy Schram Anthon, IA mobile (712) 259-0210 2015 could be historic for cow-calf sector PRODUCERS (USPS445-860; ISSN0887-2767) PRODUCERS LIVESTOCK NEWS is published bi-monthly by Producers Livestock Marketing Association, 4809 S. 114th St., Omaha, Nebraska 68137-2308. Gary Smith, CHAIRMAN. Mack Woodward, VICE CHAIRMAN. Rick Keith, PRESIDENT. Dave Nickelson, TREASURER. Deb Engler, SECRETARY. Dirck Steimel, Editor. Periodical’s postage paid at Omaha, Neb. and additional entry office. POSTMASTER — Send address changes to: PRODUCERS LIVESTOCK MARKETING NEWS, 4809 S. 114th St., Omaha, Neb. 68137-2308 Continued tight global supplies of cattle and beef through the end of 2014 have kept U.S. beef producers in the driver’s seat into 2015. “I see 2015 as being another historic year for cow-calf producers,” said Lee Schulz, an Iowa State University Extension livestock economist. “It may well be an above-average year for stockers and backgrounders, as well.” This builds on the momentum of 2014, when cattle and beef prices advanced from what were then historic levels at the beginning of the year to a nearly continuous series of record levels throughout the year. “Cattle and beef prices are expected to maintain these levels in 2015,” Schulz said. “While they’re not likely to increase as much or as fast as in 2014, they may average higher than 2014 and could set new record prices seasonally during the year.” The same factors that played key roles in 2014 will likely determine how much higher cattle and beef prices will push in 2015. Schulz contends that both supply and demand are combining to drive prices. “Feeder cattle supplies will continue to tighten into 2015 with a smaller 2014 calf crop, increased heifer retention and the likelihood of fewer cattle imports from Mexico and Canada. The 2015 calf crop may grow with limited herd expansion in 2014, but continued heifer retention in 2015 will keep feeder supplies tight.” Schulz said. Although retail beef prices are expected to keep rising, feedlots and packers will struggle to maintain margins as high feeder and fed-cattle prices will likely outpace the speed of wholesale and retail price adjustments. “The feedlot segment is where I expect the largest pullback in returns, at least relative to 2014,” Schulz said. Rebuilding the herd On the flip side of a pullback, did the beef-cow herd begin expanding in 2014? It appears so, although the final confirmation will come in the U.S. Department of Agriculture’s (USDA) cattle report on Jan. 30, Schulz said. The more important question is how much herd rebuilding occurred in 2014, he added. “Herd expansion is expected to continue in 2015 and for several more years, but it is by no means guaranteed. How fast and large inventories can and will expand will likely depend on weather, land availability, productivity gains, capital availability and growth in domestic and export beef demand,” Schulz said. Most herd expansions in the past have included one to two years of minimal or modest herd growth, followed by two to three years of accelerated growth. “With this in mind, 2014 into 2015, and 2015 into 2016 could be a period of modest growth, followed by faster growth in 2017, 2018 and 2019,” Schulz said. “In that scenario, we’re looking at the low in the beef supply in 2016.” Demand the wildcard Production, prices Beef production is expected to decrease another 1 to 2 percent in 2015, following the 5 to 6 percent year-over-year decrease in 2014, Schulz said. Cattle slaughter will likely decrease another 1.5 to 2.5 percent in 2015, with fewer cows and yearlings in the slaughter mix. Steer and heifer carcass weights will likely remain large following the sharp increase in late 2014. While these weights will average higher in 2015, they’re unlikely to increase much above current record levels, Schulz noted. Going forward, the focus will continue to be on beef demand in 2015 as further reductions in beef supplies push wholesale and retail beef values higher. “While beef demand in 2014 was stronger than expected, additional meat supplies from increased pork and poultry production in 2015 will add more pressure to retail beef markets,” Maulsby is a freelance writer in Lake City, Iowa. With that in mind, now’s a good time to evaluate production methods and see if marginal adjustments are warranted, Schulz noted. For example, conception rates may be boosted marginally by having cows in better shape at breeding. Also, ensuring bull fertility with breeding soundness exams may avoid decreased or delayed conception. Cow and calf health programs should be evaluated to reduce the risk of performance and death loss. With the large number of dollars at stake, Schulz also advises cattle feeders to maintain some form of price protection. “Using strategies that protect downside risk while allowing participation in further rallies still looks like the best route to follow,” he said. Producers Livestock News January 2015 3 From My Desk By Rick Keith, President PLMA W After low production and record prices in 2014, what's in store for cattle farmers in 2015? ow, 2014 was quite the year for the cattle market. We saw the lowest beef production numbers for 20 years and the second highest export numbers in history. Short supplies of beef led the market to setting all-time record prices in all areas of beef production; bred heifers, fats, feeders, stockers. Retail meats also set record prices in all categories. Probably the biggest jump has been in cash calf prices; they were 50 percent higher at their top than in 2013. The cow/calf farmers have had a wonderful run. Now we need the stocker and fed cattle pro- FARMING FROM PAGE 1 Motivating farmers Among the items on her to-do list as a face of farming: “Just getting farmers motivated to share their story,” she says. Farmers don’t have to tackle a large issue like defending gestation crates, Erin says. Consumers and audiences want to know what farmers do on their farms to keep pigs safe and healthy. “You have to say I got up today and say my feedline was broken and it was 10 degrees out and I fixed it, and now my pigs have feed,” she says. “People want to know that.” Talking to people who have no understanding of the pork industry or agriculture can be a little more difficult, but Erin says farmers can start small. “Someone you don’t know, ask them what they do. That’s a great way to start,” she says. How does Erin do it? She talks to her hairdresser. “I always tell my hairdresser: I know my hair is a mess. It’s always wet, I shower four times a day, I’m sorry,” she says. That always sparks a good MARGINS FROM PAGE 1 rowing intentions moving forward and even a conservative estimate on the number of pigs saved per litter, it puts us at or near record pig crop levels.” Productivity, demand The average pigs saved per litter reached a record high of 10.23 for the September-November 2014 period, compared to 10.16 for the previous quarter. This uptick shows a welcome return to better productivity in U.S. herds, said Schulz, who noted that the biggest improvement has come from larger operations. It’s also important to note that the U.S. swine industry a year ago was in the middle of the PEDV outbreak, which decimated entire farrowing groups of some herds. Those herds now carry a level of immunity, and so far the disease ducers to enjoy these same profits. One of the major reasons that the cow/calf men and women have seen these wonderful prices is the fact that they sell their product in the cash market. Auction barns, videos or private treaty; the cash price is set by the highest bidder and not some contract. Think about contracts We have seen contracts come into the fed cattle business in a big way. Have you not seen what has happened in the poultry, turkey and swine markets? In the swine market we are basing the entire price on less than 2 percent of the marketed livestock. We don’t conversation, she says. So Erin tells her hairdresser that she showers four times daily because the farm has strict biosecurity policies to keep pigs safe. They shower into the farrowing house to keep biohazards out of the barn, and “shower out for courtesy,” she says. Erin says she wants to help others learn more about the industry and about their family’s farm. Erin and Tim started educating others by introducing their sons TJ and Peyton to the farm at an early age. “Responsibility and respect are huge things in raising animals-that you can’t learn in a classroom, ever,” she says. Peyton, 3, wants to be a farmer; TJ, 8, an astronaut. “They don’t have to come back, but I want them to understand what this is here,” Erin says. Nurturing environment Rob and Char Brenneman, Tim’s parents, established the farm in 1980. Tim and Erin were the first back to the farm after college, and other family members followed. Most family members work on the farm on a daily basis, Erin says. And the employees who aren’t fam- hasn’t had nearly the same impact as last winter. While PEDV contributed significantly to the tight supply situation in 2014, retail pork demand stayed strong. “Given the pounds produced and consumed in the United States in 2014, the retail price realized was higher than most expected,” Schulz noted. “The second and third quarters of 2014 were among some of the best quarters for U.S. retail pork demand, the way I estimate it, in more than 10 years.” That’s a positive signal for the entire pork industry, because the public was willing to pay more for those reduced pork pounds than the industry expected. Perhaps U.S. consumers saw more value in those pork products, Schulz said. Maybe the products were more convenient. It could also be that consumers were less sensitive to the price or enjoyed improving want this in the cattle industry. Packers have been running around the country trying to sign up producers on contracts. Do you really think they are to your benefit? They are for the benefit of the packer, and as the cash cattle market falls below 20 percent nationally you will see changes. Texas, Oklahoma and Kansas are the worst offenders. Texas and Oklahoma trade almost nothing in the cash cattle market. They rely on Iowa, Minnesota and Nebraska to set the contract prices for them. Stephen Koontz from Colorado State University has an idea: the government should not report the cash cattle trade. Instead, he says, the people ily? Well, they’re treated like family, too, Erin explains. The farm celebrates birthdays and shares holiday dinners. They support their local community and sponsor youth baseball teams. And the farm definitely supports youth and new ideas. “I think that’s a big key to our success—bringing youth and new ideas,” Erin says. “We have access to some of the most amazing minds; I find that so cool about this farm.” City lights to farm gate As a face of farming, she’ll connect with consumers and share her farm story. She said she expects to connect with consumers who are also mothers and answer questions they might have about the industry. “How did I get here? I was just living in Chicago it seems like not too long ago,” Erin says. “I never stepped a foot on the farm, never touched a pig. How did I become one of these people? And that’s moving for me. It’s cool; I think it’s very cool.” To connect with Erin, check out the farm’s Facebook page (Brenneman Pork, Inc.) and follow her on Twitter (@sowmomma). incomes. “Likely some or all of this is true, which led to a positive demand story in 2014,” Schulz said. Risk management key While the positive trends of 2014 have primed the swine industry for expansion going forward, expansion is often a mixed blessing. “It’s to some extent a warning for the industry that we might see much larger hog and pork supplies in late 2015 into 2016,” Schulz said. That’s why price risk management should continue to play a key role, he added. “Marketing plans, and the price risk management tools employed, should be flexible enough to adjust strategies to react to changing market conditions.” Maulsby is a freelance writer in Lake City, Iowa. selling on contract should pay the cash cattle seller’s fees to get the information. Why should we help the big feedlots of Texas fill contracts when we are the ones setting the cash market of which their contracts are based? Right now the government is the biggest supplier of this information for free. buying puts on your cattle, this will give you the best marketing opportunities when your cattle are ready for sale. No one knows what 2015 will hold in store for pork and beef prices; we are still in very short supply in the cattle industry and the hog farmers are starting to build the breeding stock. Hedge, buy puts Thank you We will be hearing more about these contracts in the upcoming months. As always we advise hedging or at least We at Producers Livestock look forward to working with you in the upcoming year. Thank you for your business. USDA reports January January 22 — Milk production Livestock slaughter Cold storage January 23 — Cattle on feed February February 19 — Livestock slaughter February 20 — Milk production Cold storage Cattle on feed PRODUCERS A trusted partner for generations. For more than 60 years, Producers has provided marketing and related services to the ag industry. Today, we’re changing to meet the needs of agricultural operators with new products and services, including: - Country marketing/contract services - Commodity hedging for grains/livestock - Financial services and loans - Education and personal planning Producers Livestock Marketing Association 4809 So. 114th Street Omaha, NE 68137-2308 Marketing Division: 1-800-257-4046 Credit Division: 1-800-950-7522 4280 Sergeant Road, Suite 240 Sioux City, Iowa 51106-4710 Commodity Division: *A branch of Producers Commodities, L.L.C. 1-800-831-5936 Pork Division: 1-800-318-5619 ProducersLivestock.net 4 Producers Livestock News January 2015 By Richard Ellinghuysen Vice President, Producers Livestock Pork 2015: More hogs, more demand The consensus among most hog price analysts is for a favorable 2015 followed by a “dangerous” 2016. Analysts estimate U.S. hog farmers will produce at least 5 percent more pork in 2015 with the last quarter being closer to 7 percent with continued expansion into 2016. That would be real bad news for 2015 markets if it weren’t on the heels of 2014 characterized by a PEDVreduced hog kill and looking forward at new 2015 Asian demand. China factor in pork price Many analysts believe that China’s sizable reduction to its sow herd in 2014 is going to drive pork imports to record levels in 2015. Bad pork prices in China resulted in them culling 6 million sows the last 12 months, taking them to the lowest level since January 2009. Some analysts project a jump in China pork imports by more than 15 percent. If the U.S. gets a nice piece of that demand, it’ll be supportive to prices. But some also see U.S. domestic pork demand flattening as more and cheaper poultry becomes available this year. Avian flu is popping up around the globe and there have been some poultry bans against U.S. chicken. This could put more and cheaper poultry in the domestic market sooner than later. On the other hand, flu in other countries could cut the global poultry supply overall. Analysts also see a continuation of high beef prices this year making both pork and poultry very price competitive domestically. Foot-and-mouth disease (FMD) is currently spreading in South Korean hog and cattle herds, so South Korea may need to import both beef and pork. PEDV isn’t totally gone in the U.S., Canada and Mexico and could still fire up and moderate pork supply. Mexican hog slaughter was down more than 10 percent last year due to PEDV, resulting in more U.S. pork imports into that country. Energy prices have dropped. Feed grain prices have fallen. Inputs may be the lowest they’ve been in a while, and that allows for hog profits even if hog prices are significantly lower in 2015. A few wild cards of uncertainty include Russia, Brazil and the strong U.S. dollar. Russia’s ban on food from the West because of sanctions ended U.S. exports to them and busted the European Union (EU) hog market. The EU is now aggressively pursuing Asian markets. The Russian ban also made Brazil a big winner as they supplied more than 70 percent of Russia’s imported pork at one point last year. A strong U.S. dollar makes our pork more expensive in global markets, and encourages imports into our own country. Hedge at profitable levels I encourage producers to hedge at least a portion of their production at profitable levels each year. The unknown is also why some hedgers left money on the table last year when they probably would have made bigger profits by not hedging. Still, it’s likely even hedgers made unprecedented profits – unless they were clobbered by PEDV and spent heavily on ISO/feeder replacement pigs. Even then, most producers made money in 2014. So is 2015 the year to avoid hedging? I can’t advise that. I continue to advocate a plan of consistently hedging a portion of hogs produced and use of a strategy to “stair step” profit levels higher when opportunity arises. Why risk giving back the equity that’s been built recently when markets eventually turn south? Like the certainty of death and taxes, markets that go up will eventually go down. Will 2014’s amazing occasional $100 per head profits eventually bring $100 per head losses some day? I hope not. But those who say we’ve reached a new plateau and hog prices will never go below $70 need to remember what happened to corn when those prices were supposed to plateau “permanently” above $5. Be afraid of 2016? There is a growing consensus that producers should be afraid of 2016. The hog expansion that’s currently under way in the United States will be full blown by then; as will poultry expansion. Cattle industry expansion is projected to be in play now, and more and less expensive beef may be available then - or by 2017. A strong U.S. dollar also “encourages” a lot of Aussie beef to head our way and the USDA is currently working to get South American beef [FMD risk] and European beef [BSE risk] approved for importation. All of the “new” livestock in production from ongoing expansion – chickens, hogs and cattle – will drive more feed grain demand and may put upward pressure on input prices. By 2016 producers worldwide with weaker currency making their meat more price competitive, may also have a better foothold in the Asian markets. Meanwhile U.S. hog production biosecurity, driven to improve by PEDV, will likely be better than it’s ever been, increasing our productivity to record levels. Let us help Put it all together and experts call the 2015 outlook a bit mixed but generally optimistic and 2016 rather scary. Like always, time will tell. Talk to your Producers Pork Agent and let them help you maximize the value of your hogs in the cash market week-to-week, and ask them to help you form a plan to hedge your bets with cash flow and hedge contracts going forward. We want you to be successful today and tomorrow. Thank you for your business. Iowa Pork Congress to be held Jan. 28-29 in Des Moines The Iowa Pork Producers Association (IPPA) has worked hard over the past several months to bring you the best show possible and we invite you to participate in everything Pork Congress has to offer. It’s with great pride that IPPA presents this 43rd annual event at the Community Choice Credit Union Convention Center in downtown Des Moines. We’re excited that more than 280 companies covering all facets of the pork industry will be represented at the tradeshow in more than 530 booth spaces. Iowa’s status as the leading pork-producing state in the U.S. is recognized by companies worldwide; the exhibitor list includes many international firms that market products and services of interest to pork producers. You will want to check with the companies that are rolling out new products this year. You can easily access who has what in the New Product Showcase. Many pork producers find great value in the free seminars provided at Pork Congress and IPPA has built a reputation for having some of the best speakers and subjects perti- nent to the industry anywhere. This year’s lineup includes sessions on Iowa regulations and nuisance cases, PEDV, pit foaming, economic forecasts and policies. IPPA has made arrangements to show Academy Award-winning filmmaker James Moll’s feature length documentary “Farmland” on Thursday afternoon. The film takes viewers inside the world of farming and the lives of six young farmers and ranchers in their twenties. I encourage you to make it a point to watch the film if you haven’t seen it. The 2015 Iowa Pork Congress will feature a keynote address by Damian Mason. “Agriculture’s Professional Funny Man” will discuss modern ag trends, challenges and what lies ahead in telling farming’s story with sharp wit and intelligent humor. Damian’s presentation will be on Wednesday at 2 p.m. IPPA is again reaching out to tomorrow’s producers and leaders for the seventh annual Youth Swine Judging contest on Thursday at the Iowa State Fairgrounds. This has rapidly become a popular event and we’re hopeful for another big turnout of 4-H and FFA mem- bers to learn more about the industry and compete for valuable scholarships. You may notice that IPPA is launching a new promotion during this year’s show to showcase pork and to drive customers to downtown Des Moines’ restaurants during Pork Congress and beyond. “Dine on Us!” replaces the Winter Pork Picnic. Discount coupons will be distributed to consumers and these can be redeemed on a pork meal at a participating restaurant. The week’s activities begin on Monday with the annual IPPA Taste of Elegance contest and reception. The IPPA Annual Meeting will be held on Tuesday, followed by the annual Kickoff Reception and Auction. The Pork Congress Banquet is on Wednesday evening. It’s an exciting week for the pork industry with events and activities for everyone. We appreciate your interest in Pork Congress and hope your participation is rewarded. On behalf of the IPPA board of directors and staff, thank you for attending and keeping Iowa the nation’s pork leader! Sincerely, Jamie Schmidt IPPA president
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