CALGARY — The forecast for U.S. hog producers is more consolidation, more exports and higher short-term prices, according to agriculture and livestock consultant Bruce Ginn of BMI Ag Services.
Ginn told the recent Alberta Pork annual meeting that pork demand has stabilized in the United States, which means exports will likely increase slightly beyond the current 23 percent of total production.
“Exports are probably going to rise next year, and Asia and China are probably going to be a big reason why,” he said.
“There’s no way on God’s earth that China can produce enough of meat, food, to feed the pork consumption that they have in that country.”
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However, he predicted the U.S. would meet export demand with a smaller herd because of steadily increasing productivity.
American hog producers have increased their productivity by three percent per year for the past 20 years.
It means the U.S. herd will shrink to 5.5 million sows from 5.8 million, assuming exports increase. If they don’t, the breeding herd will shrink to 5.3 million.
“We don’t need as many as we once did, and that’s not necessarily a bad thing.”
Ginn said hog inventories are lower than U.S. Department of Agriculture estimates issued in September, when it said slaughter would be up by one to two percent.
In fact, slaughter is three or four percent lower.
“A lot of this can be traced to PED (porcine epidemic diarrhea),” Ginn said. “The impact of PED is a hell of a lot more than just death losses. If you change your biosecurity in a hog operation, what does that do? It changes your pig flows.”
He said the livestock and poultry industries have done a good job of adjusting to the biofuel era of higher feed prices.
As well, costs may also drop be-cause of this year’s larger crop and a recently announced reduction in the biofuel mandate, which may free up corn that was once used for ethanol production.
Even so, Ginn said the U.S. is no longer the lowest-cost producer of pork. Chile now holds the title.
“The gap between the U.S. and South America has not only narrowed, but South America has surpassed the United States in the last six months,” Ginn said.
As for meat that competes with pork, he said cattle producers have not adjusted as quickly to market forces exerted by ethanol production, and beef supplies will contract again next year as they retain heifers to rebuild herds.
“Cattle and beef prices are near record high,” he said.
“They’re going to stay there.… Beef is going to support pork demand.”
Cattle herds are rebuilding, but “pork’s going to be in a pretty advantageous situation relative to beef.”
Ginn said stronger hog prices next year and lower feed costs will be conducive to hog industry expansion, with larger pork supplies in late 2014 and early 2015.
He predicted a price decrease in later 2015, but that will depend on export demand and trade.
Ginn criticized mandatory country-of-origin labelling in the U.S., which has caused a trade dispute between the U.S., Canada and Mexico.
“MCOOL was one of the stupidest trade barriers that people ever came up with,” he said, quoting research that shows few Americans care about additional labels on meat products.
His company objected to the legislation when it was first proposed, predicting that “we’re going to incur a hell of a lot of cost, piss off a bunch of people, including probably our trading partners, and it won’t make a dime for anybody in the business except for lawyers.”
“I was tickled to death to see your response to MCOOL,” he said about Canada’s objections at the World Trade Organization and its plans to take retaliatory measures if necessary.
