September 27, 2007

 

Factors favour stable growth for US hog sector, analysts say

 

 

A mix of favourable factors would ensure the continued stable growth for the US hog sector, livestock analysts said.

 

Strong profits, improved productivity, and an influx of Canadian hogs have kept expansion of the US hog herd on track for a record period of time, livestock analysts said.

 

The US pork industry has had a record-long string of profitable months, and profitability leads to growth, said Jim Robb at Livestock Marketing Information Centre. Although this is very modest growth by historical standards, it is still growth, Robb asserted. 

 

Increased hog imports from Canada and improvement in domestic productivity due to fewer disease problems have helped expand the hog population, despite higher feed costs, he said. 

 

Losses from the circovirus were limited this year through the wider use of vaccines.

 

At the same time, market hogs are up more than the breeding herd, reflecting some improvement in US productivity, Robb said.

 

A Reuters estimate puts the US hog herd expansion at 2.1 percent from a year ago as of June 1. The breeding herd average estimate was 100.8 percent and the market hog average was 102.2 percent.

 

Market hog inventory is up because of increased productivity.

 

Pigs-per-litter has been improving the last 14 quarters, said Ron Plain, livestock economist at the University of Missouri.

 

Meanwhile, strong pork demand has led to higher than expected prices.

 

Furthermore, record corn planting, along with decent weather, should help to keep feed costs under control, he said. 

 

This could be a better year for pork producers than previously thought, Plain said.

 

Although the breeding herd is up slightly from a year ago, it should be down slightly from the June report as the industry continues to ease back from the large expansion of the past few years, he said.

 

Plain said the USDA put the June breeding herd number at 100.9 percent of a year ago, but now he has it at 100.5 percent.

 

Environmental issues, construction costs and higher feed costs may further slow expansion, he added.

 

On the other hand, demand from China is encouraging expansion, along with a bullish outlook on hog futures.

 

Overall, most producers might stay where they are -- not losing enough money that they would want to cut back and not making enough to justify new farms, he concluded.