I’m writing this week’s thoughts as I sit in the MSP airport on my way to China. I will be working with the US Soybean Export Council and Chinese pork industry people on this trip. Some of the attendees at my meetings will be producers and many will be nutritionists, technical advisors, allied industry and farm owners.
As I spend 8 days traveling in China I hope to get a sense of how extensive their sell off of breeding stock really was. Was the sale of almost 10 million sows mostly from the small back-yard traditional producer or did some/many of the newer production sites also reduce their inventory?
Current reports that I’ve seen from China suggest that the local price has risen to a profitable level again so will there be talk of expansion?
What about local feed grain prices? In the Mankato area corn bids are now around $3.15/bu and reports of below $3 bids are coming in from South Dakota already. Once the harvest begins and storage fills, will basis widen even more? Same thoughts for soybeans and soy meal in our region. Soybean plants that are 5-6 ft tall mean a lot of pods and with all of the rain we’re on the road to a very good harvest in the upper Midwest.
Given our expectations of a continuation of relatively low grain prices at the local level, how does our feed cost compare to local conditions in China? Last year when I was in China US corn was almost $11/bu in October so the cost of gain advantage for US pork was huge. At the same time, the devaluation of the Chinese currency will impact the ability of the Chinese to import both pork and feed grains so what will I find for local prices in China?