September 27, 2004

 

 

Profitable Pork Prices Expected To Persist In The US
 

Profitable hog prices may continue into 2005 despite an expected increase in pork production. Industry analysts revealed this after the U.S. Department of Agriculture released a quarterly hogs and pigs report.

 

There were 61.4 million hogs on U.S. farms on September 1, which is 1 percent more than a year ago as well as three months ago, the department reported.

 

The U.S. breeding hog inventory totaled 5.98 million head, also 1 percent more than a year ago and June 1. Market hog inventory in the United States was 55.4 million head, up 1 percent from a year ago and up 2 percent from June 1.

 

Larger numbers of hogs headed to market next year will not necessarily derail profitable hog prices, said John Lawrence, an Iowa State University Extension economist.

 

Iowa's hog producers have enjoyed seven successive months of profits, according to estimates compiled by Iowa State Extension.

 

Iowa hog producers lost money eight months out of 12 in 2003, according to ISU estimates.

 

Lawrence expects strong demand for pork and lower feed costs to keep profits rolling in for Iowa hog producers, at least for the first nine months of 2005. After that, he said, the forecast gets a little cloudy.

 

"It looks like 2005 will be a pretty good year for pork producers," Lawrence stated.

 

Daniel Bluntzer, director of research for Frontier Risk Management in Chicago, sounded a cautionary note.

 

"There definitely will be no shortage of hogs or pork next year," Bluntzer said.

 

Hog slaughter in 2004 set a record, Bluntzer said, and 2005 will top that by almost 2 percent.

 

Ron Plain, professor of agricultural economics at the University of Missouri at Columbia, said that although the number of hogs slaughtered rose 4 percent this year, hog prices rose 30 percent because of strong demand for pork.

 

"How much longer we can continue to kill more hogs and get a higher price for them, I don't know," Plain said. "Demand has continually amazed me this year."

 

Bluntzer said 2004 has had strong demand for pork.

 

"If that demand rug is pulled out from under us, then we are going to be in trouble," Bluntzer said.

 

John Weber, a hog producer from Dysart, said he saw no indication that Iowa's hog producers were expanding despite the good profit picture ahead.

 

"We are seeing hog producers who are running at capacity and improving their production by improving their feeding or their genetics," he said, "but few are building new facilities to raise more hogs."

 

The USDA report said that Iowa maintained its No. 1 hog production status with 16.3 million hogs on Iowa farms, a 1 percent increase from a year ago.

 

The number of market hogs in Iowa rose 1 percent and the number of Iowa breeding hogs rose 3 percent compared with a year ago.

 

Iowa producers' 3 percent increase in breeding hogs was larger than the 1 percent increase for the United States and reversed a trend that had been going on for several years, Lawrence said.

 

"This is a bit of a turnaround," he said. "For many years, we've been reducing our sow herd and increasing our pig imports. This might show that there is a little bit of optimism back in Iowa."

 

North Carolina maintained its No. 2 hog state status at 10.3 million hogs, a 1 percent increase from a year ago. Minnesota was No. 3 with 6.6 million, a 2 percent increase from 2003.

 

The Agriculture Department also reported that the number of hogs raised on contract in the United States and owned by operations with more than 5,000 head made up 39 percent of the U.S. hog inventory. The figure is an increase of 4 percent from a year ago.