Source:Tom Johnston, MEATINGPLACE, 3/3/17



U.S. pork producers continue to expand their herds as windfalls from 2014 and relatively cheap input costs help them weather lagging pork pricing and new slaughtering capacity set to come online in the fall provides an incentive.

So said analysts Thursday after USDA released its quarterly Hogs and Pigs report, which showed a record crop of 71 million head, up 4.2 percent from the year-ago report. That compared to analysts' average expectations of a 3.9 percent bump in the total inventory.

Other Dec.-Feb. numbers included: breeding herd up 1.5 percent (year on year), pigs kept for marketing (up 4.4 percent), farrowings up 2.8 percent, and a record high 10.43 pigs saved per litter.

Most of the numbers more or less fell in line with the expectations of analysts, who have become accustomed to the continued expansion since 2014 after the market rebounded from PEDV and said they don’t see an end to the trend in the foreseeable future, so long as slaughter capacity expands on time. New plants in Minnesota, Iowa and Michigan are expected to add 26,000 head-per-day (at an average of 5.4 days per week) slaughter capacity by the end of the fall.

“The theme here is obvious,” said analyst Kevin Bost, president of Procurement Strategies Inc., on a conference call discussing the report. “Hog numbers are still growing. As a trader, it’s hard for me to expect an increase in pork prices in the foreseeable future. [Production cuts] are not on the table. The December-February farrowing intentions were actually bigger than intentions reported in [September-November], and March-May intentions are bigger than [December-February intentions]. I think that tells us the story now.”

Len Steiner, president of Steiner Consulting Group, said on the call that eyes should remain on exports, which are expected to rise to 21.7 percent of total U.S. pork production in 2017; and per-capita U.S. pork consumption, expected to inch up by 1.27 percent this year. “If either of those [increases] don’t happen, you’ve got problems on prices,” he said, adding that getting the new slaughter capacity up and running on time also is key. 

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