Pork Exports

SwineCast 0568 Show Notes:

• Director of International Trade Policy, Sanitary and Technical Issues at the National Pork Producers Council, Laurie Hueneke, discusses the nuts and bolts of keeping our export markets open and producer responsibility.

SwineCast 0526 Show Notes:

• Iowa State's Dr. Dermotte Hayes provided an excellent economic overview of the potential of the Chinese market for North American producers with an interesting, though perhaps not politically feasible, perspective on why China should stop building their domestic swine industry.

SwineCast 0418 Show Notes:

• Steve Meyer's CME Daily Livestock Report pencils in some numbers on cost of H1N1 to producers
• U.S. Meat Export Federation CEO Phil Seng shares on fallout and possible recovery period for flu residue in international markets

SwineCast 0409 Show Notes:

• Continuing the conversation with NPPC's Nick Giordano on recent international trade wins for U.S. producers and the importance of representation and grassroots support in Washington

SwineCast 0408 Show Notes:

• NPPC's Nick Giordano reviews major industry issues in the trade arena and the administration changeover in Washington

If you think about it, each dollar of expected pork revenue, as we look at 2009, has a variance around it. That is to say, not every lb of forecasted sales has the same likelihood of being realized. It is safe to say that the anticipated level of demand from domestic consumption is well known and relatively low variance. The demand which originates from the export markets is highly variable and can come from surprising places. Because of this, there is no doubt that the expected income variance is much higher for export sales than it is for domestic purchases and as you might suspect, it has a higher expected value. Those two attributes tend to go together.

     The total demand for US Pork can be conveniently broken down into two components: domestic demand plus net exports.  Net exports is the excess of exports over imports of pork for the US.  We seem to know that US production of pork will be falling in 2009.  I say seem to know since this is based on projections by USDA (Hogs and Pigs Report).  What we do not know is if the projections are correct (what is their error variance) and what will happen to productivity increases to offset this decline in farrowing intentions from last fall.  We can surmise that the sows leaving the industry are the poorest performing ones (least productive) and that productivity gains from the remaining farms is likely to rise.

     China is facing some serious internal issues related to the global slowdown that is underway.  Growth is certainly slowing in China as a direct result of weakening global demand for its products.  This poses some significant problems for the Chinese economy since it is widely believed that China must maintain a 7-9% annual increase in GDP to maintain employment stability.  Last year growth was almost 12% and has been double digit for many years.  Forecasts for 2009 have been as low as 5-6% up to the minimum levels in the target range.

As we watch the markets throughout the world plunge trying to find a trading range, we are witnessing the global market reset to economic fundamentals.  Before you think this is unambiguously bad (the reset) consider that this entire event spanning the last two to three years was set in motion by government policy actions and the flood of liquidity beginning after the September 11th attacks.  The market is simply correcting now what government policy actions have caused, a massive destruction of the mirage of paper wealth they created.

SwineCast 0350 Show Notes:

• Special Soviet travelogue with Genesus Jim Long, just back from Russia and the Ukraine.