Iowa City, IA - There's light at the end of the tunnel for the nation's hog producers who are experiencing a record 27-year low in prices, say some experts who forecast a possible rebound.
“The ... thing producers need to keep in mind is, yes, it's dismal out there, but this won't last,” said Ron Plain, extension marketing specialist at the University of Missouri.
Plain, participating with other experts Monday in a teleconference held by the National Pork Producers Council, said prices also were depressed in 1994, although not as low as today's levels.
“We went through a period similar to this, where we had more hogs for a few weeks than it looked like we had capacity to slaughter, and it passed. We saw a rather dramatic rebound,” Plain said.
There's a glut of pork on U.S. markets now, and slaughterhouses are at capacity, meaning there's limited competition among meatpackers for products.
Iowa is the nation's largest hog state, with about 18,000 producers, followed by North Carolina, Minnesota, Illinois, Missouri, Indiana, Nebraska, Oklahoma and Ohio.
Last week, a record 2.1 million hogs were slaughtered, according to the U.S. Agriculture Department. The old record was 2.08 million set in December 1994.
“At that time, we pushed hog prices down into the $20s, not quite as low as they were this time, but from December of '94 until the end of January, we saw about a $15 increase in the price of market hogs,” Plain said.
“So I think producers need to keep in mind, yes, it's bad right now but this is sort of a temporary problem that the industry will be able to work through,” he said.
Hog prices were in the $20 range per hundredweight last week, said Cindy Cunningham of the National Pork Producers Council.
Plain said hog producers should not panic and “should be trying to minimize their losses” by reassessing what they're doing.
“One is, we sure don't need to be backing up hogs right now. Feed efficiency get worse as pigs go past 250 pounds, 260 pounds,” he said. “That adds to our cost of production, and it also adds to our pork on the market.
“I'm really concerned that we may see some producers respond to these very low hog prices by deciding to store some hogs,” he said. “That could just make matters worse.”
Hog producers also need to guard against over-capacity, Plain said.
“A lot of producers try to run their facilities at around 102 percent, 103 percent, 105 percent of capacity,” Plain said. “In doing so, they give up some efficiency in animal performance. When hog prices are high, you can afford to do so.
“With these kind of prices, you need to get cost of production as low as possible,” he said. “Now is a better time to try to manage your facility at 95 percent, 98 percent of capacity, rather than trying to see how many hogs one can possibly crowd into a finishing building.”
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
Return to Home Page