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Livestock analyst bullish on pork demand

A livestock futures analyst says the addition hog slaughter capacity is positive for the hog market.  Dennis Smith with Archer Financial Services in Chicago refers to two plants that opened this month in Iowa and Michigan.

“That will allow us to process pigs at the peak production season in the fall without having serious backlogs develop,” Smith told Brownfield Ag News Tuesday.  “It’s going to allow us to not have hog numbers as we did in the fall of 1998, which was a total nightmare.”

Even though daily hog slaughter has set records the past couple of days at 460,000 head, Smith says pork inventories are down.

“Pork is being absorbed through the export channel, and through higher domestic consumption here in the U.S.,” said Smith.

But pork exports are an important part of demand, he said.  The United States’ biggest ham buyer, Mexico, has backed away from the market during renegotiation of the North American Free Trade Agreement (NAFTA).

“We must have NAFTA back in place for the U.S. pork producer to remain competitive, to remain profitable,” he said.

Smith is bullish on hogs because of the big investment by packers in new processing capacity.  He says the plants would not have been built without a strong belief in pork demand.

“They know what kind of demand they are faced with on a daily, weekly and monthly basis and I have to believe they know what they’re doing,” said Smith.  “Pork demand is rising, will continue to rise.”

AUDIO: Dennis Smith (5 min. MP3)