Times could get tough for hog producers next year unless the size of the Canadian and American breeding herds shrink by the end of 2001, warns Steve Meyer of the United States
National Pork Producers Council.
Meyer, the council’s director of economics, predicts pork supplies will grow this year, even without more breeding sows.
And that means producers could lose money in 2002, he said during the Grain World conference in Winnipeg recently.
To avoid those losses, the breeding herd must fall by two percent or so by December 2001, Meyer said.
Read Also
Going beyond “Resistant” on crop seed labels
Variety resistance is getting more specific on crop disease pathogens, but that information must be conveyed in a way that actually helps producers make rotation decisions.
The problem is that while the number of breeding sows is lower than it was in 1998, when hog prices collapsed, litter sizes are larger. The weight of hogs going to market is climbing as well.
The result is more pork.
The question is how long the market can bear the expansion.
Pork demand could weaken this year. The U.S. economy is cooling, he said. While he doubts there will be a recession, consumer confidence has been shaken.
Interest rates are dropping, but Meyer thinks it will take time for that to restore confidence and investment.
“The thing that has been driving meat demand, especially beef demand, may be a thing of the past.”
Corn prices could rise this year due to smaller acreage. That could cut into profits if producers can’t pass on higher feed costs to consumers.
Meyer did have some good news.
U.S. pork exports were well ahead of imports last year, meaning surplus pork moved offshore. Pork exports to Mexico are booming and Japanese imports show steady growth.
Packer profit margins are well ahead of last year’s margins, providing incentive to slaughter more hogs.
The effect of European mad cow disease and foot-and-mouth disease on U.S. exports is not yet clear.
Another concern, though, is packing capacity. Little new capacity is expected in the U.S. until 2003.
Canadian capacity, even with the new Maple Leaf Brandon plant, won’t lighten the pressure, Meyer said.
Expected U.S. hog productionof 104 million head in 2002 will strain packing capacity.
