Highlights from Doane Outlook Conference
click image to zoom But hog producers are showing signs of expansion. Farrowing intentions are up for the first quarter of 2014 and sow slaughter is declining. Combine these factors with strong gains in pigs saved per litter and we could see pork production up 2 percent to 4 percent in 2014. At least based on the data in the September Hogs and Pigs report, the PEDV (virus) outbreak this spring had a very modest affect on the size of the pg crop. We haven’t seen much increase in domestic demand but export growth is strong and sales to China could rise even more with the recent sale of Smithfield to a Chinese company.
It has been several months since USDA provided any data on the size of the milk cow herd, but milk production continues to rise. The data suggest that producers are expanding and milk production profits have improved significantly. We believe the number of milk cows has increased to more than 9.26 million head, up from 9.22 million when the last official number was reported in February. Dairy product exports are rising and this has helped to support milk prices. Additional expansion in the dairy sector is expected in 2014.
Conference attendees got an update on the overall macroeconomic outlook from the Chief International Strategist of Wells Fargo Advisors. The outlook for the U.S. economy is generally more of the same – positive but slow economic growth. However, China’s economy could be headed for a major restructuring.
It appears that China’s government officials may want to shift the economic model from production and export of relatively low value-added goods to production of higher-value items aimed for domestic consumption. While that may be a good thing in the long term – it could cause some problems in the near term including higher unemployment and slower economic growth. The speaker also predicted that the U.S. dollar will strengthen in the year ahead, which will tend to make U.S. agricultural exports more expensive to foreign buyers.
Our weather consultant is forecasting a colder than normal winter and thinks it could stay cooler than normal and maybe wetter than normal in the spring. He does think that we are in a period of more unsettled weather and that assumptions of “normal” weather may prove to be off the mark. Current conditions in the Pacific suggest that we will not see an El Nino of La Nina develop that would significantly affect crop weather conditions for 2014. His forecast suggests improving conditions for crops in South America.
There was a mountain of additional information presented at the conference but these represent our key takeaways from the event. All of the conference presentations are available on our website www.doane.com.