April 4, 2006

 

Hog industry in US state records profits for 26 straight months

 

 

With hog producers in the US state of Iowa recording profits for 26 months running, it is no wonder they feel obliged to give themselves a congratulatory pat on the back.

 

Iowa, the leading hog-production state, has nearly a quarter of the nation's hog inventory at 16.3 million head.

 

Analysts said if there is no significant increase in corn prices, profits in the hog industry should continue until October this year.

 

If hog producers still recorded profits after that, they would have broken the record for the longest period of profitable hog production, according to John Lawrence, an Iowa State University economist.

 

Hog producers are still cautious about any plans for expansion though this is not necessarily a bad sign as it reduces the risk of any over-expansion, analysts said.

 

The last record was nearly 2 decades ago, running from December 1976 to August 1979.

 

A USDA report showed that the number of hogs and pigs on US farms on Mar 1 increased 1 percent from a year ago, to 60.1million head.

 

Iowa and Indiana reported the largest increases in breeding pigs, with both states adding 20,000 breeding hogs from a year ago. Missouri, another farming state, has also increased the number of its breeding hogs by 15,000 while four other states have increased 10,000 each.

 

These changes all indicate higher slaughter numbers in the next few months, which may hurt prices in the later part of the year.

 

Analysts agree there would not be major changes in hog supplies until the last three months of the year, when hog prices might head south.

 

Despite hog producers putting a hold on expansion plans, hog prices are 16 percent down from a year ago, mainly due to fewer pork exports and increased competition from beef and poultry.