June 11, 2004

 

 

US Hog Prices Remain High Despite Record Production
 

US hog prices remain relatively high despite record production in the past six months, industry analyst Glenn Grimes said.

 

Since 1997, world pork consumption has risen faster than chicken consumption, Grimes said Wednesday.

 

"Pork is the meat of choice worldwide," he said.

 

Grimes said demand is good for pork at the supermarket because of the popularity of low-carbohydrate diets and an improved image of meat. Also, first-quarter exports are up 26 percent over a year ago.

 

U.S. pork exports to Mexico this year are up more than 50 percent compared with a year ago.

"We're on a roll," Grimes said.

 

He said hog farmers should continue to make profits in 2004 because of strong demand for pork here and abroad. Only higher costs for corn and soybeans, the primary ingredients of feed, will put a damper on producers' profits this year, he said.

 

The fact that hog prices have been so good given record production has surprised many analysts.

 

"I didn't see it coming," Grimes said.

 

Grimes, a former economist at the University of Missouri-Columbia, is now a consultant for the National Pork Board. He spoke Wednesday at Pork Academy, a hog production seminar held annually on the eve of the World Pork Expo, being held this week at the Iowa State Fairgrounds.

 

Hog farmers are meeting the demand by raising more hogs than ever.

 

Grimes said that the number of hogs slaughtered by U.S. packers is expected to run at record rates for the next six months and that 2005's total should top this year's output.

 

Nevertheless, strong demand for pork should keep hog prices at profitable levels for the rest of this year, Grimes said.

 

Current profits are reversing more than 10 years of losses, Grimes said. According to Iowa State University estimates, farmers lost about 4 cents for every hog sold from 1991 through 2002.

 

Those losses reversed a profitable streak that lasted from 1967 to 1990.

 

Grimes cautioned hog producers not to expand production because of the current high prices.

 

In the past, he said, producers have added buildings and hogs when they have made money -- in part to avoid paying more income tax.

 

"This is one time they should pay higher taxes instead of expanding," Grimes said.