US Hogs and Porcine Epidemic Diarrhea (PED) – What does it mean
Friday morning was a normal day and the market was testing new recent highs in the June 2013 contract. The strength faded some as resistance seemed to hold and then all of a sudden we were down over $1.00/cwt and ultimately $2.00/cwt. This type of action isn’t necessarily all that uncommon, however, when something like this happens you wonder why. I began my normal routine of trying to track down any information I hadn’t seen and there was a tweet on my timeline that caught my eye; “Hearing rumors about a big disease problem in baby pigs across Texas, Iowa , and Minn. Any truth to it??”
After seeing this we contacted as many people that we could that are either within the industry, traders or anyone who may have any information on this possible disease rumor that was floating around. Sure enough, we hear that it is rumored to be PED. After doing a little research online about what PED actually is, I’m thinking to myself, hmmm, this isn’t something that should be viewed as bearish the hog market, at least a face value.
Once more information came to the surface; however none of it from an official source, the market calmed a bid and began to recover a larger portion of its decline. I can say that I’ve had direct contact with a producer in Iowa that has PED on his farm and based on his comments to me, it isn’t a very merciful disease. He expects to lose around a month’s worth of production due to the outbreak on his farm.
We are still in the information gathering stages of what this “outbreak” really is. If it’s relatively small then the market impact will be very similar, small. If it is large then we can expect to see some additional strength in the 4th quarter 2013 and 1st quarter 2014. All of this said assuming that our exports, what is left of them, are not harmed. If they are, then we have issues.
With corn and meal prices at the levels they are in the aforementioned quarters, it would be extremely beneficial if you got your house in order on what your profitability goals are for these timeframes. I would venture to guess that these futures months will be relatively active over the coming days and MAY provide some excellent opportunities to make marketing decisions. Know your crush numbers.
If you have any information on an “outbreak” on either your farm or someone you know and you are willing to share some information it would be greatly appreciated. You can drop me an email at email@example.com or tweet me (information below). Let’s face it, we may be competitors in some regards but we are all in this together.
Keep in mind, I started digging into this issue based on a tweet from a gentleman that I visited with a few times on twitter but I’ve never met him nor do we know each other outside of our social presence online. If you don’t have a twitter account, I would suggest getting one. There is a lot of thought provoking information that flows by “tweet”. If you would like to keep up with the PED situation, you can follow me on twitter at https://twitter.com/leanhog as I send tweets with any new information we gather throughout the week.
Here is an article on PED from Beth Ferry with the Michigan State University Extension and it is important to note one particular sentence in her article… “It is important to note that this disease is not transmissible to humans and does not affect the meat or meat products.”
Biosecurity alert for pork producers – swine herds have no immunity to new virus from Europe.
Posted on May 17, 2013 by Beth Ferry, Michigan State University Extension
A possible outbreak of Porcine Epidemic Diarrhea (PED) has been recently reported in several states including Minnesota, Iowa, Colorado and Indiana. This is a new virus to the United States so it is expected that there is no immunity to any swine herd. PED has been found in swine herds in Europe and Asia starting in the early 1980s.
This disease is similar to TGE (Transmissible Gastroenteritis) and causes severe watery diarrhea in pigs. Morbidity in sows and piglets is high. Mortality, especially in piglets is also frequent due to dehydration. Swine herds typically experience an outbreak in 4 to 5 days once exposed to the virus. Clinically, there is very little difference between TGE and PED.
There is no treatment for PED. An emphasis should be made on prevention and control. If your herd is exposed to the virus, suckling pigs should have free access to water to help decrease dehydration and gestating sows can be exposed to the virus to help build immunity in piglets, similar to methods used with a TGE outbreak. Introduction of new stock should be suspended during an outbreak, along with increased internal biosecurity practices to help decrease the spread of disease within your herd.
Although all transmission routes of PED have not been confirmed, it is suspected to be transmitted via infected pigs, transportation vessels and contaminated fomites. In order to help protect your herd from possible infections, efforts should be made to increase biosecurity protocols, with special emphasis on transportation biosecurity. Proper washing and disinfection protocols for all trucks returning from market should be followed. Proper washing and disinfection protocols for all trucks returning from market should be followed. It is important to note that this disease is not transmissible to humans and does not affect the meat or meat products.
If you suspect clinical signs or have questions please contact your herd veterinarian. For more information on PED and biosecurity practices for swine farms please contact Beth Ferry, Michigan State UniversityExtension Pork educator at firstname.lastname@example.org or 269-445-4438.
This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).
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Corn – Dec ’11 had enormous volume the last couple of days and is building up for a breakout of the current $6.25 to $6.65 range that we have been in for nearly a month. I favor the upside on this breakout but I’m beginning to question whether or not it will happen. Fundamentally I think we have every reason to breakout to the upside because of the USDA’s magic numbers (continued feed reduction) they come out with each month.
The market currently seems poised to try and test the $6.30ish level of support but I have a tough time getting a good handle on this market at the moment. It is like a Jekyll and Hyde type trade. It is still a great time to use know risk strategies to control feed costs for the foreseeable future!
Bottom Line – I expect an early low and a late high for tomorrows trade.
Meal – Dec ’11 is currently below $300! There is a buy signal created on the weekly chart at $299.50 stop which will be good for this week and next. This isn’t a recommendation but the way these markets have been trading, now is a great time to protect upside price risk with a known risk strategy.
Bottom Line – I’m looking for an early low tomorrow.
Hogs – Feb ’12 had an interesting day today as the market rallied on news of… ahhh, nothing? Yep, sounds to me like our good friends at Goldman Sachs were creating some liquidity today by pushing the market higher to hit buy stops and get small specs long the market. Once everyone was long today then the market sold off so the big boys could buy the futures contracts that the weak specs were selling out of. Is this fact? No, but it is what I believe happened. The interesting thing to me is that the market backed off going into the close and really didn’t do much for the day.
I’m still of the opinion that we test the $85.50ish area in the Feb ’12 contract before we find some solid bottom-picking in the market. The cash market sounds sick and would expect most producers to stay as current as they can moving into the new year. It sounds like there are plenty of hogs in the countryside for packers to choose from. The frustrating part about this is they may still need pigs but they will not pay up for them. I would expect this to be the case as it is what I hear from our network of cash negotiators. This network is for the benefit of the industry so if you are so inclined please join in! See details below.
Bottom Line – I’m looking for an early high in the Feb ’12 hog contract for tomorrow.
CASH HOG PRICE SHARING NETWORK
We have been using Twitter as a tool to share negotiated cash hog information since April 2011 and it has been working well. We still need more participants to build our network and provide more valuable information to producers that sell open market pigs or are thinking about getting into the negotiated market to some degree.
There is a lot of work to be done in getting more negotiated hogs into the mix of our daily slaughter. Industry experts suggest that we need 10% of the daily slaughter to have fair price discovery and we are currently running below 5% on most days! If there are not enough negotiated pigs in the future then new packer contracts will more than likely be based off of the product and what cutout does. The hog producers would be hurt by a move like this because there would be absolutely no control over their marketing’s. Export business DOES NOT show up in our cutout reports.
If you are interested in what goes out on Twitter just visit www.markethogs.com which will bring you to my twitter page and you can see what is posted. We have producers setup so these messages go directly to their cell phones in the form of a text message to keep producers as up to date as possible on cash news.
Producer hog margins are still very good at the moment but don’t expect them to last forever. If you haven’t made any moves in the market please review your situation and visit with your risk manager about a plan!! If you have been caught in the MF Global debacle and need help with your account and are looking for a place to call home you can give our office a call as we would be glad to help. Our toll-free number is .
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