Source:  Lisa M. Keefe, MEATINGPLACE.COM, 10/18/10

Although higher feed prices are not good news for pork producers, the industry is not expected to experience the wide swings in production and profitability that it suffered in 2008, AgStar Financial’s Mark Greenwood told Stephens Inc. equity analyst Farha Aslam.

Aslam summarized her conversation with Greenwood, manager of a $1.3 billion hog lending portfolio, in a letter to investors.

Greenwood expected a 1 to 2 percent drop in pork supplies in calendar 2011, compared with a 1 to 2 percent increase projected by USDA.

Meanwhile, lenders such as AgStar Financial are being more targeted in their credit management, and capital is “more likely to be called from inefficient producers and funds more tightly managed in the escalating corn environment.”

Overall, however, packer margins remain “very good” and are expected to remain so, Aslam notes.
In the same document, Aslam says Smithfield is “well positioned in the current hog and pork market;” the slowdown of Tyson’s proposed Triumph plant “should relieve some pressure with respect to hog availability;” and for Hormel, “the ability to push branded product pricing higher will likely be the key driver for [fiscal] 2011 earnings.”

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