Genus buoyed by US hog market recovery

The recovery in hog markets, which has driven Chicago prices to a record high, has provided a boost to semen group Genus by encouraging farmers to upgrade their herds.

The livestock genetics company said its North American porcine business had traded well in 2010, as the glow from a doubling in prices of Chicago hogs in nine months revived farm incomes.

Genus said the division is currently experiencing increased demand from customers to update the genetics in their herds as confidence in the strength of the market recovery grows.

The revival follows a sustained period of difficulty for hog producers, hit first by higher feed costs, during the 2008 grain price spike, in and then lower meat demand as recession took hold.

The group noted in February that hog farmers had been saving cash by deferring the updating of the genetics in their herds, besides making deep cuts to animal numbers. The cutbacks coupled with a revival in demand fostered by economic revival, was credited for the rise in hog prices above 90 cents a pound in Chicago last week.

The improvement in Genus's hog market fortunes in the US contrasted with a decline in China, where farmers are battling soaring corn prices which have returned the country to importing the grain.

Meanwhile, sales of dairy semen in North America were also soft, curbed by milk prices which, while significantly higher than last summer, remain below the cost of production for most farmers, according to the group.

However, with beef semen sales relatively buoyant and demand improving in Latin American operations, the group said it was sticking by forecasts for results for the year to the end of next month.

Genus shares closed up GBP0.4 higher at GBP0.724 in London.