Page 1 - APN Jan 2017

Vol 22. No. 1 January 2018 Australian Pork Newspaper PO Box 387 Cleveland 4163
CRC sees grainy outlook
Phone: 07 4697 3344 • Fax 07 4697 3532
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What’s in store for pigs in the year of the dog
WELCOME to another year and one I sincerely hope will be good for you and the Australian pork industry.
I expect your percep- tion of how good 2018 might be will depend largely on pig prices and costs.
At this early stage of the year, predicting grain prices, at least in the short term, may be easier than predicting pig prices.
Grain grabs
Profarmer grain prices quoted in Australian Pork Limited’s Decem- ber 22 issue of ‘Eyes and Ears’ showed grain prices considerably higher in Queensland and northern NSW than the eastern seaboard, with southern NSW and Adelaide delivered prices for wheat quoted as $237 and $242/tonne respectively.
Corresponding quotes for barley were $245 and $235/tonne.
If grains can be bought at these prices, feed costs in these areas (in- cluding Victoria) will
Initiatives
by DR ROGER CAMPBELL CEO
be reasonable and lower than in 2016.
The difference in wheat and barley pric- es varied across states and regions and I im- agine this reflects the relative abundance of the two grains, but re- member barley has about 93 percent of the digest- ible energy of wheat, so it’s easy to compare the relative value of each for pork production.
Having said that, we’ve seen plenty of barleys with DE values ap- proaching and even ex- ceeding that of wheat.
You can really only determine this by using AusScan and to ensure feed cost is minimised,
your nutritionist should certainly test all grain bought or intended to be bought.
Pig prices
gin for an 80kg carcass based on an average feed cost of $365/tonne and selling 22 pigs per sow, per year would be about 33.5 cents/kg or $27/pig.
For a 75kg carcass at the price quoted, the margin would be 26 cents/kg.
The difference demon- strates the advantage of heavier carcass weight and greater volume/sow.
Using the average seller’s price of $2.84 for the 60-75kg carcass weight range, the margin on a 75kg carcass would be about 15.9 cents/kg, which shows the advan- tage of higher price.
Sale weight in 2018 will be determined be- tween the producer and buyer and both should remember that it costs more to produce lighter pigs.
Price in 2018 will de- pend on demand and supply and following the unusual trend of down- ward prices between January and June/July last year, we really don’t have much recent history to go on for this year.
It’s hard to see demand changing too much in 2018 and supply will depend on the margins or lack of them able to be made by producers across the industry.
This, in turn, will be affected by grain prices and, as I said previously, these initially at least look OK for central/ southern NSW, Victoria and SA, but not so good for northern NSW and Queensland.
Let us see what hap- pens with grain prices now the harvest is com- plete and watch the trend in pig price in the next few months to get a bet- ter idea of what 2018 might deliver.
☛ continued P2
I’D like first of all to wish all the pig produc- ers and others involved in our industry an en- joyable and prosperous 2018 – clearly the indus- try has some rebuilding to do in terms of im- provements to pig prices and this is certainly a priority at Australian Pork Limited for this year.
I think one of the suc- cesses of our industry over the past 10 years has been an improved focus onwhywedowhatwe do – that is, to provide healthy, safe and natural pork to our Australian and overseas consumers.
We’ve begun to realise our professional and ethi- cal production practices only have meaning when someone is prepared to buy and consume our product, and their enjoy- ment of it and prepared- ness to buy it again is key to our industry being a sustainable one.
On this score, we’ve done pretty well since 2010 – fresh pork con- sumption per capita has risen by 25 percent since this time and this has pro- vided the underpinning of a number of years of very good returns for our producers.
We’re all very aware of the change to this situa- tion starting 12 months or so ago when prices turned in a different direction, mainly due to reaching a tipping point in the bal- ance of supply and de- mand.
The growth in demand continues – it’s just sup- ply started to grow faster.
My opinion is prices will improve, but this will happen slowly and not without further pain for those in the industry at the higher end of produc- tion cost, without a niche
Point of View
by ANDREW SPENCER CEO
offering or not having the strongest (contracted) relationships with their buyers.
Of course, we’ll be do- ing everything we can to minimise this pain, but we have to be realistic; APL works to make a dif- ference with demand and we believe we do this ef- fectively but do not have any influence on supply of pigs, week by week.
We have, however, worked hard in 2017 to improve the information getting back to industry relating to what is going on with pig supply.
Our latest produc- tion survey indicates the peaks of supply growth we saw last year of be- tween 5 percent and 6 percent year on year pork production will be behind us and a much more mod- erate growth level will be expected.
I’d like to acknowledge and thank the export pro- cessors who have agreed to provide their weekly slaughter numbers in a transparent fashion, ena- bling us to have a bet- ter feel for what is going on with shorter-term pig numbers going through the system.
As an industry, longer term, we still have lots of challenges.
Predicting grain prices, at least in the short term, may be easier than predict- ing pig prices.
Our production costs – for a gamut of different reasons – are well above world best practice and this is an ongoing threat.
We need to keep find- ing incremental gains through better reproduc- tion, feed conversion, disease management and animal housing but we also need to think outside the square and take ad- vantage of the continually surprising new technol- ogies that are disrupting industries all around us.
Potential disruption needs to be an opportu- nity for us rather than a threat to how we do things today.
In world terms, Austral- ia is a small country, even more so in the pork world where we represent less than half of 1 percent of production.
But we punch way above our weight when it comes to innovative thinking, quality research and development, crea- tive marketing, sustain- able and ethical produc- tion systems and working with our consumers and communities to continu- ally ask the difficult ques- tions necessary to take our industry forwards.
In this respect, I don’t think 2018 will be any different.
Stockyard Industries 54 King Street,
Clifton QLD 4361
07 4697 3344
A PL’s December ‘Eyes and Ears’ report showed sellers’ prices on December 15 ranging from $2.70 for carcasses above 85kg to $3.01 for carcasses between 45kg and 60 kg.
I’m not sure if it was correct, but the price quoted for carcasses between 75kg and 85 kg was $2.94, some 10 cents higher than those between 60kg and 75kg.
If correct, then allow- ing for the impact of cull carcasses on the average price received, the mar-
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