Foreign visitors come for a variety of reasons. Our Canadian neighbors attend because their production systems, methods and problems are similar to ours. In addition, there are many production links across the border, both for pigs and for allied support services. Technology transfer between the US and Canadian industry occurs daily and both countries have benefited.

The Chinese are increasing their presence at World Pork Expo. The first Chinese visitors were brought over by groups doing business in China, such as the American Soybean Association and US Feed Grains Council. As the Chinese industry modernizes, many US companies are bringing their Chinese partners over for a look at US production technology.

As you walk the trade show at Expo, another interesting foreign group are companies trying to sell to US producers. The Chinese are evident with such materials as woven wire flooring and other products that may compete with US made goods based on price, just as Chinese made clothing, TV’s, etc. compete with US goods in retailers such as WalMart.

Here in the Midwest, we’re aware of the Chinese every time they make a major purchase of feed grains. Their very large purchases of US corn and soybean are often market movers. US corn and soybean producers are aggressively pursuing this foreign market by sending pork, poultry and even aquatic production experts over there. The goal – increase use of feed grains for protein production.

Note that the goal isn’t to immediately or directly increase consumption of US grains although that is the long term goal. In most cases, as the Chinese increase consumption of both domestic and foreign feed grains, the world price rises due to the increase in demand which the Feed Grains Council and American Soybean Association view as a direct benefit to US members.

With the world’s second largest economy and along with India the world’s largest population, whatever China does in the way of domestic production impacts US agriculture in a big way.

Here are the design details that I use for soffit inlet sizing when double-wide tunnel barns are 102 x 196 in dimensioning.
• 8″ MINIMUM continuous south/east soffit with 8″ clearance at plate. The math becomes:

4-24″ fans (or 6-21″ or some combination) plus 1 36″ plus 1 52″ fan before going into tunnel mode in each room – this is often in the range of 50 cfm/pig or 62,000 cfm/room

 2 rooms = 124,000 cfm from attic
 196 ft long rooms
 124,000 cfm / 400 cfm/sqft soffit = 310 ft2 soffit inlet recommended
 310 ft2 / 196 ln feet = 1.58 ft wide soffit = 19” wide soffit opening

• If you have 8” of south/east soffit (0.67 ft wide), the air velocity when both rooms are in stage 4 ventilation and the north/west soffit is still closed becomes:

 124,000 cfm /(196 ln ft x 0.67 ft) = 950 fpm.

This adds 0.05 static pressure to the system due to the need to pull air this fast thru the soffit. This is more than we want/recommend, but I know I’m lucky if I can get 8” by the time insulation chutes are installed, etc.

• Fans sized on stage 1 so you can get to 2 cfm/pig range for starting single stocked weaned pigs. This may mean turning off one fan and turning off actuated inlets.

• Nothing other than bird netting (1” minimum opening) on soffit openings– no punched metal of any kind.

For the combined US/Canadian inventory, 81.6% of the breeding herd and 84.6% of the kept for market inventory is in the US. The majority of the 3% difference between the kept for market and breeding herd percentages reflects the movement of Canadian weaned pigs and feeder pigs to US finishing sites. Since January 1, 2012, US producers have imported an average of 92,275 weaned and feeder pigs per week. In 2011 we averaged 91,029 weaned and feeder pigs imported per week. In 2011, the US imported 4.81 million weaned and feeder pigs. This is down from the 6.61 million head peak in 2007 prior to the implementation of MCOOL.

This suggests that about 3.5% of the US barrow and gilt slaughter is born in Canada and transported to US finishing facilities. This isn’t a big number relative to daily/weekly/yearly US slaughter numbers. However, it represents a large percentage of pigs born in Canada, especially pigs from Manitoba where a majority of these pigs are born. Manitoba producers reported 8.728 million pigs born in the past 12 months.

On any given week, approximately 2/3 of the imported Canadian pigs originate in Manitoba. While I don’t have the exact numbers on-hand, this suggests about 3.2 million pigs born in Manitoba end up in the US, or something just over 1/3 of their pig crop ends up in US facilities. With this much pig movement to the US no wonder the Manitoba Pork Producers have a booth at the trade show in Minnesota, Iowa and the World Pork Expo.

Another number I routinely track from both the USDA and Canadian inventory numbers is the kept for market inventory per breeding animal. On March 1, US producers had 10.15 market animals per breeding animal, on April 1 Canadian producers has 8.16 and the combined North American number stood at 9.79. In 2000 the combined March/April number was 8.39 pigs.

The increase is due to both an increase in sale weights and improved reproductive efficiencies. The net consequence is the need for more grow-finish facilities. Several people have asked me if the boom in grow-finish facility construction this summer reflects an expanding breeding herd. My reply – maybe. For sure, a part of the expansion is the need for more space to account for this growing inventory.

The 69.782 million pigs in the North American kept for market inventory is up from 68.416 million in the same period last year and 68.144 million in 2010.

As we go into the corn planting season this year, getting corn delivered for our feed needs is becoming a growing challenge for feed mills in the upper Midwest. Evidence of this is the tightening corn basis.

I receive a daily USDA report on average corn prices across Iowa, along with a basis (difference in price versus nearby Chicago futures price). This basis has been narrowing and now stands at -$0.18/bu. This compares to the previous 5-yr average basis of -$0.33 in April.

However, the average Iowa basis doesn’t tell the whole story. I routinely follow the cash corn bid at several locations across Iowa and the local basis is now at $0.00 or even slightly positive. I have seen several ethanol plant bids also nearing $0.00 basis.

This suggests that corn supplies are in very strong hands and owners of the remaining 2011 crop aren’t in any hurry to sell this crop. In order to get grain, bids must be $0.30-40/bu above historic basis relative to the nearby Chicago futures price.

Beginning with late September bids for the 2012 crop, basis levels drop back to historic levels of -$0.40 or more. New crop corn bids are now below $5/bu at many locations in Iowa.

All of this discussion of local corn basis patterns suggests an interesting summer for feed ingredient prices. The difference between buying corn on the Chicago futures market versus actually paying for corn at a local mill will have a big impact on cash flows. Many producers have purchased a good share of their feed grain needs using Chicago futures prices along with selling a portion of their live hogs in a similar manner. If they didn’t account for the tightening of the corn basis it will result in less profit than anticipated.

A couple of weeks ago I came across statistics for the pork slaughter industry in Germany courtesy of www.thepigsite.com. A couple of points immediately sprang to mind. The first is the size of the German slaughter industry. In 2011 they slaughtered an estimated 59.475 million pigs or 54% as many as US packers. Given the size of Germany relative to the US, this suggests Germany has a very dense population of pig farms, even accounting for the fact that a growing segment of Germany’s slaughter numbers are imported from Denmark.

It is also interesting to note that the 4 largest slaughter companies slaughtered 60.3% of all pigs slaughtered. The largest company in Germany is Tonnies at 25.9% of the slaughter industry, followed by Vion at 16.8%, Westfleisch at 12.0% and Danish Crown at 5.5%.

This slaughter industry structure is almost identical to the US slaughter industry . Dr Steve Meyer’s estimate of US slaughter capacity in 2009 for the National Pork Board was 444,925 head per day (www.pork.org).

Of this total, 4 companies have 64.4% of the total estimated capacity. Smithfield has an estimated 28.4% of the US slaughter capacity with its Smithfield Foods, John Morrell and Farmland divisions (126,300 head). Tyson Foods is second with 16.8% (74,550 head), followed by JBS Swift at 10.6% (47,000 head) and Cargill Excel at 38,500 pigs or 8.7% of the US total capacity.

If we round out the top 10 companies in the US we get 88.3% of all slaughter capacity. The next 6 largest slaughter companies in the US are Hormel at 8.3% (37,000 head), Seaboard Farms at 4.3% (19,200 head), Triumph Foods at 4.3% (19,000 head), Indiana Packing Co. at 3.7% (16,500 head), Hatfield Quality Meats at 2.4% (10,600 head) and J.H Routh at 0.9% (4,200 head).

US slaughter capacity isn’t likely to grow very much in the next few years. Dr Meyer says he has identified as few small increases in slaughter capacity, but we are still under 450,000 head per day total US capacity. While we think there will be enough capacity to kill all pigs in a timely manner this fall, both of us are worried about slaughter capacity in the fall of 2013. If production begins to expand this fall in response to the favorable prices offered on the futures market (up to last Friday’s sell off at least), do we have enough capacity to market and slaughter our pigs in an orderly manner or are we facing 1998 type pressures again?

The current week to week decline in average price is now steeper than the last years decline. As a point of reference, SEW pig prices typically decline from a high around years end (representing pigs destined for early summer markets) to week 33 of the year (mid-August).

There is still quite a bit of interest in new facilities for construction this summer. Producer calls this week dealt with both wean-finish and nursery construction projects. There does appear to be renewed interest in nursery facilities. In some cases it’s driven by concern about higher heating costs for large wean-finish facilities, sometimes by the desire for better environments for challenged health status pig flows and sometimes by siting issues. A nursery for 2500 pigs is relatively small and doesn’t come close to any animal unit limit that often restricts grow-finish facilities.

The challenge for both nursery and grow-finish facilities is sizing attic inlets large enough to get sufficient air into the attic to supply the large number of ceiling inlets being installed. Producers are asking for more ceiling inlets (usually actuated) so they can get better air quality to all parts of rooms.

Curtain sided grow-finish barns are now often sized for 42 cfm/pig ceiling inlet, nurseries at 45 cfm/pig and tunnel ventilated barns at approximately 50 cfm/pig. If there are 1200 pigs in the room, the number of ceiling inlets is similar in all 3 situations. Since the nursery is generally 50% or more smaller than grow-finish facilities, attic inlet area becomes a critical design issue.

In general, designers want one square foot of attic inlet per 400 cfm of ventilation air. If they go with one square foot per 800 cfm of air, this adds approximately 0.04” of static pressure to the ventilation system. At 800-1000 fpm ceiling inlet velocity we already have 0.04-0.05” of static pressure to get air thru the inlet. If anything causes inlets to be partially plugged such as inlet doors, dirty soffit, incorrect soffit materials, etc., the static pressure on the fan increases and fan performance declines. As fan output declines in response to higher pressures, electricity usage goes up to move the same amount of air, resulting in higher operating costs and potentially higher fan maintenance costs.

I recently worked on a nursery ventilation design for a 100 x 100 nursery that would be 2 rooms of 1250 pigs each (100 x 50 rooms). If one of the soffits is closed in winter weather due to concerns with snow drifting into the attic, the remaining soffit must be sized large enough to supply air for both nursery rooms. In this case, the soffit (and associated clearance above the installed insulation chute at the plate) needed to be almost 18 inches wide/tall. The solution in this case was to add a gable end inlet and even then sizing was a concern.

If you’ve been following the US corn market, this past week the trade took nearly $0.50 off of the price of bushel of corn. New crop corn bids at country elevator points that I routinely follow dropped below $5/bu earlier this week. The tight carry-out stocks estimate is making for some interesting bidding at country elevators and ethanol plants.

For example, the Farmers Cooperative Society in Sioux Center, Iowa, a major buyer of corn for livestock feed, is bidding -0.06 basis for April delivery and is $0.04 positive basis for August delivery. However, they drop to -$0.45 for October delivery, a basis closer to the historic basis for the region.

At the VitaPlus Swine Summit earlier this morning there was discussion of how ‘early’ corn would be planted in the corn belt. Many corn growers are waiting until April 11 in this region to begin planting, even if soil temperatures are warm already, because that is the first planting date allowed for Federal Crop Insurance. There were several industry advisors at the meeting who had seen corn already emerged in southeast Iowa and central and southern Illinois in a few fields. I’ve heard several producers speculate that if they wait to plant corn closer to historic time-frames, they expect it to emerge rapidly since 4” soil temperatures are in the mid to upper 50’s already for much of northern Iowa and southern Minnesota.

As a point of reference, the 4” soil temperature at the University of Minnesota Southern Outreach and Extension Center in Waseca is 54F this afternoon and already peaked at 68F on March 23. As of yesterday, the daily average 4” soil temperature for March is 44.1F. This compares to the 1976-2010 daily average on April 1 of 37.3F.

Following this meeting, Nutriquest, a nutrition company headquartered in Mason City, Iowa, sponsored a session dealing with the changing nutrient profile of our DDGS feed ingredient as an increasing number of ethanol plants being to remove corn oil from their product. Nutriquest, through their ILLUMINATE program, has one of the world’s largest data bases of DDGS nutrient assays.

Dr Rob Musser began the day with data on how DDGS is changing as ethanol plants alter their production practices. In March of 2011 he estimated that there were 132 ethanol plants in the US producing DDGS as a co-product. Of these plants, greater than 80% were not extracting any corn oil from the thin stillage flow following the fermentation process.

In contrast, this year he listed 143 ethanol plants with DDGS as a co-product. Almost 40% of the plants are now doing some form of corn oil extraction. The result of this growth is corn oil removal can be seen from their data. In March of 2011, DDGS samples averaged 10.0% crude fat. This year they are averaging 9.3% and he predicted that in 2013 the average will drop to 8.5%.

Dr Jerry Shurson from the University of Minnesota followed Rob on the agenda. Jerry walked the audience thru the economics of oil extraction. Crude corn oil currently is selling for approximately $0.45/lb. An ethanol plant that is producing 100 million gallons of ethanol has the potential to remove 10-20 million pounds of corn oil by relatively simple processes. He estimated it could be done with a $3-4 million dollar investment. The payback on this investment is months, not years making the decision really simple to understand.

For pork producers who purchase DDGS, the removal of some of the corn oil is a concern as corn oil is thought to be a major contributor to the energy pigs derive from this feed ingredient. The big question everyone in the large crowd in attendance was thinking about – what is the feeding value of these new lower oil co-products?

Dr Brian Kerr, a USDA swine nutritionist, tried to answer this question by reviewing the available data. As he stated in his presentation, he knows he disappointed many in the audience by stating that the value is not as closely related to fat content as many had hoped for. Many came to the meeting hoping Brian would give them an estimate of that associated the decrease in fat content with a decrease in energy – something that could be used in establishing a relative price for these new co-products versus the products they had considerable experience in formulating diets with.

Brian’s basic message was that fat content is not a good predictor of overall energy content in the new co-products. As a co-product of a fermentation process, the fiber has been changed by the fermentation process and the co-product now includes fermentation co-products that don’t necessarily look like the corn they came from. His conclusion – for now we only have limited information to work with in formulation of diets with the new co-products and it will take more research and production experiences to come up with estimates of the value of these co-products relative to other ingredients. The good news – he thinks the value will be higher than what you would predict if you only relied on the lower fat level as a predictor.

The data represents both US and Canadian producers and the presentation is the largest publicly available look at current North American performance. The data gives us chance to benchmark our production performance versus ‘normal’. Thanks to Dr Stein and MetaFarms for sharing these numbers with the industry.

The big topics of discussion at both meetings will be PRRS breaks, corn prices and new barn construction, both wean-finish and new sow units. All of these are really discussions about the 2013 market year as this year’s pig crop sales are already fixed – matings done today will be sold to slaughter early next year.

Given the extreme (at least what we consider extreme) dryness in southern Minnesota and general dryness in the western cornbelt, everyone is asking about planting intentions and general crop prospects. It appears from the comments I’ve picked up here at Denver that much of central and eastern Iowa and states to the east have adequate moisture going into the new crop year. The challenged areas appear to be northwest Iowa, southwest Minnesota, northeast Nebraska, Kansas, etc. This may be the year the newly released drought tolerant corn varieties get to demonstrate their capabilities.

A lot of discussion about the magnitude of the PRRS breaks occurring this winter. Tuesday’s session here at Denver will be on PRRS exclusively. Ask any veterinarian working in the industry about their winter and they can sum it up in 1 acronym – PRRS. The frustrations of this disease are many. One of the sessions I attended yesterday included some discussion of how to maintain employee moral in the face of a major break. Working in a sow unit that has a PRRS break and getting no weaned pigs for 4 weeks can be very depressing.

There are a lot of reports of new construction, especially grow-finish and wean-finish. Already I’ve heard reports of slat plants being totally sold out for this construction year. Also some discussion of conversion of older 1500 sow sites located in the middle of hog dense regions continuing to close down and be converted to wean-finish sites, with new sow construction occurring in less pig dense regions.