News

Economists say expansion means more red ink likely for pork producers

The USDA’s latest quarterly Hogs and Pigs report shows there is expansion to an already record US hog supply.

Market analyst Joe Kerns, of Iowa-based Kerns and Associates, says while this isn’t good news for pork producers he doesn’t anticipate a repeat of 1998.

The big difference, he says, is available shackle space.  “As long as we still have the capacity, and it’s a doggone good thing we do because just the increase we saw relative to what we were anticipating, is about a half of a shift of a plant,” he says.  “It’s not to be underestimated.”

And Kerns says this looks to be a prolonged downturn.  “But not a sharp ‘v-bottom’ in the market that we saw in December of 1998,” he says.

Iowa State University livestock economist Lee Schulz says pork producers are going to have be more diligent in their price risk management – especially as it relates to input costs.  “We’re looking at relatively low feed costs,” he says.  “That’s an opportunity for producers to protect against any risk there and any more downward pressure on their margin.”

As of June 1^st, the US herd was 73.5 million head, up 3 percent on the year.