A profitable quarter for Smithfield Foods

For the first time since 2008, Smithfield Foods is reporting a quarterly profit. For the quarter ended January 31, the nation’s largest hog producer reports net income was $37.4 million, or 22 cents per diluted share, compared with a loss of $107.5 million, or 74 cents per share, in the same quarter of 2009. Sales fell 14 percent to $2.88 billion due, in part to the quarter being a week shorter than last year and the closing of several plants.

Packaged meat sales for the quarter were $145.3 million compared to $115.9 million a year ago. That was more than enough to offset fresh pork sales which dropped from $13.5 million to $7.5 million.

Smithfield’s hog production unit was able to reduce losses in the third quarter from $253.6 million a year ago to $55.6 million this year. CEO Larry Pope says the ongoing restructuring of the pork business will be completed in April with the closing of the John Morrell plant in Sioux City. He also believes the reopening of the Russian market and hopefully China will help put the division back in the black.

Read the quarterly report here:

HSUS kicks off anti-confinement campaign

The vote in the Ohio House Wednesday was unanimous in establishing the Ohio Livestock Standards Board that voters approved last fall in the general election. While the measure moves to the Ohio Senate, where it is sure to pass, the Humane Society of the U.S. pushes its campaign to take another stab at Ohio livestock production. The Columbus Dispatch says HSUS director Wayne Pacelle is in Ohio to kick off the group’s signature campaign for a proposed constitutional amendment to ban what HSUS and its supporters call “extreme confinement” of pigs, chickens and other farm animals. The HSUS has 400-thousand members in Ohio. Just over 402-thousand valid signatures are needed by June 29th to place the statewide proposed confinement ban on the Ohio November ballot.

A few cattle sell in the north at higher prices

Packer inquiry into the cattle was light to moderate in the North and very light in the South on Thursday. A few cattle sold in Nebraska at 146.00 on a dressed basis, generally 2.00 higher than last week. Asking prices do remain firm at 147.00 to 148.00 in the North, and 94 in the South. The slaughter totaled an estimated 122,000 head, 4,000 below last week, but 5,000 greater than last year. Boxed beef cutout values were weak on light to moderate demand and, moderate offerings. Choice beef was down .42 at 149.07, and select was down .83 at 148.37.

Chicago Mercantile Exchange live cattle contracts settled 32 points higher to 30 lower.  Front months were supported by longs rolling into June and August out of April. There were some spreaders that bought August and sold June. Uncertainty over the direction of this week’s feedlot trade weighed on the market. April settled .05 lower at 93.82, and June was .22 higher at 91.95.

Feeder cattle contracts ended the session, mostly 7 to 62 points higher with only spot March lower. Spreading out of the deferred months into March was the main feature. DTN’s Rick Kment says, traders remain unimpressed with the up and down nature of the market over the last couple of days and for the most part remained on the sidelines until late in the session.  March was down .07 at 101.92, and April was up .07 at 105.10.

Feeder cattle receipts at the Bassett, NE Livestock Auction totaled 2650 head on Wednesday. Compared with two weeks ago steers and heifers trended steady. Demand was good and trading was active. Feeder steers medium and large 1; 454 head averaging 568 lbs traded at 125.31 per hundredweight. 126 heifers weighing 583 lbs brought 107.49.

Barrows in the Iowa/Minnesota direct trade closed 2.81 lower on a carcass basis, the West was down 2.42 at 71.66, and the East was down .26 at 69.70. Missouri direct base carcass meat price closed steady to 1.00 lower from 64.00 to 67.00.Thursday’s hog kill was estimated at 414,000 head, 11,000 less than last week, and down 1,000 from last year. Saturday’s slaughter is only expected to be around 30,000 head, but Tyson’s plans were still undecided. Iowa barrows and gilts last week averaged 269.3 pounds, .1 pound lighter than the previous week, and .8 pounds larger than 2009, and 1.3 pounds heavier than the three year average.

Lean hogs settled 15 to 80 points lower on Negative fundamentals. Cash hog prices were sharply lower at midday in the direct trade. There was rolling by longs out of April into June. April settled .67 lower at 71.87, and June was down .45 at 80.20. The pork trade was slow, with light to moderate demand and offerings. The pork carcass cutout value was up .16 at 74.11.

 May pork bellies closed lower on the decline in the lean pit. Most contracts were not traded.  May finished the session .50 points lower at 92.50.

Midday cash livestock markets

A few more bids are being reported in the feedlot cattle trade at midday. But most of those are in the North at 88.00 to 90.00 live and 144.00 to 145.00 dressed, asking prices are 150.00. No bids have been reported in the South where asking prices are around 94.00. Significant business could be delayed until later today and/or tomorrow.  Choice boxed beef is .41 lower at midday, and select is down .44 at 148.76.

Feeder cattle receipts at the Bassett, NE Livestock Auction totaled 2650 head on Wednesday. Compared with two weeks ago steers and heifers trended steady. Demand was good and trading was active. Feeder steers medium and large 1; 454 head averaging 568 lbs traded at 125.31 per hundredweight. 126 heifers weighing 583 lbs brought 107.49.

Barrows and gilts in the Iowa/Minnesota direct trade opened 3.54 lower at 70.78 on a carcass basis, the West is down 2.94 at 71.14, and the East is .60 lower at 69.36. Missouri direct base carcass meat price is steady to 1.00 lower from 64.00 to 67.00. Iowa barrows and gilts last week averaged 269.3 pounds, .1 pound lighter than the previous week, and .8 pounds larger than 2009, and 1.3 pounds heavier than the three year average. While the week to week change is minimal, the fact that weights continue to hang above 2009 and the three year average represents some evidence for those that think finishing floors could be more current.

Financial bleeding in pork industry has subsided

Neil Dierks, CEO of the National Pork Producers Council said that pork producers in this country have seen the worst economic times in the industry for a variety of reasons over the course of the past two and a half years.  “Although it isn’t wildly profitable” he told Brownfield during the recent National Pork Industry Forum, “At least the bleeding financially has subsided.”

Dierks said several of the issues addressed at this annual meeting are similar or even same as those addressed in past annual meetings and will be addressed at future gatherings.   However, there is one new issue in the spotlight:

“The issue of animal health product availability has been debated on national television news but it is also being talked about in Congress. We have been working together with . . .other commodity and livestock organizations to make sure producers have access to using animal health products, because they are necessary to take care of the animals and actually it is an animal welfare issue for us because you want healthy animals.”

Enforcement issues in environmental realm, freedom to operate issues, and trade policy issues were all key topics of discussion.  ”At the same time, there is a lot of discussion about the We Care program.  It is our commitment to society and our commitment to doing a good job on animal welfare, on animal health, and community involvement to show that we are responsible citizens.”

When asked about the mood of producers at National Pork Industry Forum, Dierks replied, “Generally, people are optimistic. Money is not falling from the sky. But on the other hand we have made it through these challenges as it is related to the economy, as related to production, as related to H1N1, and the misuse of the name with H1N1. . .  producers see some opportunity to look at our future prices. There are some opportunities ahead of us. The reality is the US most competitive county in the world to produce pork. The USDA projects an 8 percent increase in our exports versus a year ago. So people are cautiously optimistic.”

Conversation with Neil Dierks

11 Million dollar verdict against hog operation

The largest monetary award against a hog farm in an odor nuisance case has been awarded in the state of Missouri.

A Jackson County jury last week awarded an 11 million dollar verdict against Premium Standard Farms hog producers, a subsidiary of Smithfield Foods. The odor lawsuit was filed on behalf of residents living near the farming operation in northern Missouri. The case was filed in 2002 by seven households.

Premium Standard Farms issued a statement following the verdict last Thursday that they are disappointed with the verdict and have grounds to appeal. They also say they will seriously consider not making future investments in the state of Missouri – that the verdict “threatens the viability of the Missouri farm economy when a farm has been granted a permit to operate by the state” and is in compliance with state and federal regulations. Premium Standard Farms says there is a gaping hole in Missouri law allowing such a thing to happen and the legislature should move to correct it.

Environmental leader has no beef with meat production

Unlike some of his counterparts in the environmental movement, Larry Schweiger has no beef with the nation’s meat producers.  In fact, he’s critical of those who use what he calls “wildly exaggerated” claims to advance an anti-meat agenda. 

Schweiger, the outspoken president of the National Wildlife Federation, was at the University of Nebraska Wednesday to discuss global warming.  After his presentation, we asked him about those environmentalists who attack agriculture— and specifically, meat production. 

“They’re animal rights groups that are pushing that, not the environmental community,” says Schweiger. “They want to stop the use of meat for food and they’re finding any way they can to do that—and I frankly take exception to their numbers—they’re wildly exaggerated and they’re not real.” 

A National Wildlife Federation report released in January suggested that increased corn plantings for ethanol production are threatening grassland bird populations in the Prairie Pothole states of Iowa, Minnesota, South Dakota and Minnesota.   The report blamed state and federal incentives for corn ethanol production for what it called “high increases in corn planting” and the resulting “destruction of natural habitat.”  

Schweiger was asked for his own views on biofuels such as ethanol and soy biodiesel. 

“Well, I think there will be some use of various ag crops,” he replied. “I actually think that there’s an opportunity in biogas.  If you were to take the corn fodder of corn residues and gasify those in a reactor, that will produce biochar.  You can put the carbon back in the soil in a way that stays there for a long time—actually improves the soil condition—while also producing gas off of these waste fuel crops.” 

Regarding climate change, Schweiger says the earth is warming at an alarming rate—and he strongly advocates stringent carbon reduction regulations.  His views are best summarized by the title of his latest book—Last Chance: Preserving Life on Earth.

AUDIO: Larry Schweiger (7 min MP3)

Animal care proposal advances in MO House

A move in the Missouri legislature to protect livestock care practices has gained some traction. A resolution supported by the Missourians for Animal Care Coalition passed the Missouri House last week. Missouri Farm Bureau’s legislative director Leslie Holloway says the intent is, “To try to ensure that additional restrictions on raising animals, whether it be livestock or dogs or whatever the case may be, are under the jurisdiction of the General Assembly rather than interests that might come in from out of state such as the Humane Society of the United States.”

If passed by the Senate, the animal care constitutional amendment would go before Missouri voters in November when an HSUS-backed ballot proposal cracking down on dog breeders is expected to also be in front of voters.

AUDIO: Leslie Holloway, Missouri Farm Bureau Director of State and Local Governmental Affairs (7 min., MP3)

Midday cash livestock markets

Barrows and gilts in the Iowa/Minnesota direct trade are down 1.93 at 71.90, the West is 1.13 lower at 72.19, and the East is .67 lower at 69.66. Interior Missouri direct base carcass meat price is steady from 65.00 to 67.00. The spread between carcass value and the weighted average carcass price is less than $2.00 implying the worst processing margins seen in the last month. Yet country numbers remain too tight for hog buyers to wrench any leverage away from the producers. Chain speed continues to be limited by fire damage at Logansport, Indiana.

A few bids on cattle were reported in Nebraska this morning at 143.00 on a dressed basis, feedlot operators are asking 150.00. No bids were reported in the South where they are asking around 94.00. We could see more preliminary bids throughout the day, but significant business may not happen until tomorrow or Friday. Choice boxed beef is up .06 at 149.57, and select was up .38 at 149.40.

Feeder cattle receipts at the Ozarks Regional Stockyards at West Plains, MO totaled 3631 head on Tuesday. Compared to last week, steers weighing less than 700 pounds were steady to 2.00 higher, over 700 lbs steady to weak. Heifers’ weighing less than 700 lbs 2.00 to 3.00 higher, over 700 lbs steady to 1.00 lower. Feeder steers medium and large 1 and 1-2 weighing 500 to 600 pounds traded from 104.00 to 125.00, 7 to 8 weights from 93.50 to 103.00. Feeder heifers weighing 500 to 600 pounds brought 94.00 to 112.00, and 7 to 8 weights from 88.00 to 95.00 per hundredweight.

Illinois Pork and Beef Legislative Day

More than 100 members of the Illinois Pork  and Illinois Beef  Associations are meeting with state lawmakers for their Annual Legislative Day in Springfield, Illinois today.  Executive Director Jim Kaitschuk of Illinois Pork tells Brownfield the number one focus for the legislature is the continuing budget deficit that’s also a concern to producers who believe some cuts are necessary. And, Kaitschuk says, “I think one of the keys is, most people would probably be willing to do some sort of a revenue enhancement if you could make sure that that actually went towards paying the deficit and not create new programs.”

Kaitschuk says producers have also been watching closely after last year’s introduction and subsequent failure of a bill to ban gestation stalls in the state, “Fortunately, to this point, in the approximately 35-hundred to 37-hundred bills that have been introduced in the General Assembly that version has not made it out there yet.”

And in an election year, he says it’s not likely to come up. He says Illinois ag groups remain vigilant in heading off any and all threats from animal rights activists.

AUDIO: Interview with Jim Kaitschuk, Executive Director, IL Pork Association (7 min., MP3)

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