Pig producers are enjoying the best sustained prices in years.
Strong demand has pushed pig prices to levels not seen since August 1997, when the market hit a profitable height.
And there seems to be no immediate reason to fear supply surpassing slaughter capacity, recreating the dizzying collapse of late 1998.
“We do not foresee a slaughter capacity problem this year,” said University of Missouri economist Ron Plain.
However, producers should still watch breeding herd numbers to see where future supplies are heading, because higher prices tend to mean more pigs a few months down the road.
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“We are uneasy about the fourth quarter of 2002,” said Plain. “Hog producers are making good money now. History says that this leads to herd expansion, which could pressure packer capacity late in 2002.”
According to Manitoba Agriculture, record bacon prices have led overall pork prices higher over the past year. That made all segments of the pork industry chain more profitable this May than they were at the same time last year.
A new record high of $2.67 US per pound for retail pork was reached in May, but is now trending slightly down. However, retail prices are still about 19 percent higher than they were a year ago, says Manitoba Agriculture.
U.S. pork production increased by 1.5 percent between January and May this year compared to last year, but strong demand has stopped that increase from sapping prices.
Pork stocks are now the lowest they have been since December 1999 and 21.5 percent smaller than last year.
Frozen belly stocks at the beginning of May were at record lows for that time of the year because of strong demand and relatively low slaughter in April.
Plain said the industry and analysts will be watching the United States Department of Agriculture June 29 quarterly hog inventory report to see how fast the breeding herd and number of slaughter animals are growing. Plain expects both to be about one percent higher.
Manitoba agriculture livestock market analyst Janet Honey said that if pig inventories are lower than last year, prices should rise.
There is still enough outstanding retail demand to carry good prices through the summer.
“Apparently, there are now sufficient orders on the books to keep hog prices from sliding much, if at all, in the near term,” Honey said.
Despite continued good prices, industry expansion has not been as fast as in past good-price patches. USDA reports many small producers left the industry in the past few years and the large operations have had difficulty expanding. The USDA expects slow growth to continue in the pork industry as long as today’s good prices remain.
