Hog numbers keep rising in the United States on top of big numbers already, not only in the slaughter numbers but an expansion of the breeding herd in the United States as well, according to the March USDA Hog and Pig report.

“We’ve clearly had an increase in hog numbers again this year on already large numbers a year ago and the March Hogs and Pigs, the four of us count more of the same than the December hogs and pigs and it’s panning out to be, as far as market supplies so far, if anything, maybe a little bit low. We’ve had a number of weeks, six, seven, eight per cent ahead of a year ago recently, and that’s larger than what the pig report would suggest, said Dr. Steve Meyer, the Vice-President Pork Analysis with EMI Analytics. “We think there is a little timing difference on some of these hogs. We don’t have as much ractopamine, not as many antibiotics being used as well. The growth rates are probably a little bit slower. So that’s gonna change some of our marketing windows, but the report, in general, said that we’re gonna have plenty of hogs this year.”

While the forecast, 3.2 per cent higher on slaughter for 2017, relative to 2016 and with the first quarter weeks even larger than last fall offset some with more slaughter capacity, but certainly larger numbers and more hogs to market and more pork to sell.

Meyer said the breeding herd up 1.5 per cent is very reasonable.

“The anecdotal evidence in the countryside is that the breeding herd is growing at that rate or maybe even a little faster,” he said. “The best producers made six dollars, or so, a head last year. The average producers probably were about break even, maybe little bit loss for the year. This year, the future’s market right now is saying eight dollars for the best and somewhere around break even for others. And those numbers aren’t negative enough to slow this thing down and so we think that we’re still gonna see growth through this year and the end of 2018.”

What about the new processing which the industry in the U.S. is bringing online and how will that affect the ability to keep on top of these higher numbers, and how may that influence markets?

“It’s pretty critical to stay on top of the numbers. We wouldn’t certainly have the capacity to handle the hog numbers coming at us in the fourth quarter this year without the new clients,” said Dr. Meyer. “The one in Pleasantville, Missouri opened last year and they’re slaughtering about 1,000 head per day. Somewhere in that range. The plant at Windom, Minnesota was to start operations at the end of last month, so that’s a good addition that the industry needs.”

He said the Triumph Seaboard Plant was completed at a more rapid pace than what they expected and Gary Lewis, their president, quoted a week or so ago that they’re gonna start processing in the last week of July. And more importantly, they are gonna add their second shift in May of next year.

“The very aggressive ramp up of that Sioux City, Iowa, and then the Coldwater, Michigan plant being built by the Clemons Food Group with some producers from the eastern cornbelt is scheduled to begin the first week of September on the commercial operations,” added Meyer.

“They’ll kill some hogs this summer as a test, and training issues and those kinds of things in their systems. They’ll be commercially open the first week of September,” he said.

In total the extra capacity add about 18,000, 19,000 hogs per day this fall while not all ramped up yet, the big plants won’t be ramped up full by the end of the year, but certainly in the first quarter of 2018, and that’s gonna increase the level of competition for hogs, at least in the short run, he said.

“Now, the offsetting thing is we’re gonna be raising a lot more hogs, so even though there’s gonna be more competition there’s gonna be more hogs available, and that’s bad and good,” said Dr. Meyer. “Number one is it won’t hold packers up as much to chase hogs to try to keep their plants full, but on the other hand, there’s probably gonna be enough hogs to keep all the plants sufficiently full. We may get through this without losing one. It doesn’t help you a whole lot if you put two on and lose one. That’s obviously a setback, and we think that there’s a good possibility that we won’t lose any of these plants.”

He thinks the export markets are gonna remain critical with the U.S. exporting over the last few years from 21 to 23 per cent of total production.

“You know that’s been the reason for strong markets in our opinion since November as a surge in exports with January and February numbers both up more than double digits,” he said. “Matter of fact, 18 per cent year to date and February and the weekly data for March would say that pace has continued. Exports are critical and they’re gonna continue that way. I mean, the domestic market here in the United States grows by population by 7 to 8 tenths of 1 per cent, per year and I don’t think there’s a home for all this extra pork in the United States, so exports are gonna be critical.”

In reference to President Donald Trump’s trade talks, Meyer said it’s not had much impact yet but remember Trump is a deal maker.

“And so he’s gonna position stuff for future negotiations, and I don’t know if that’s a bad thing. And I don’t think it’s bad to re-negotiate a 20 some year old deal because the world has changed,” said Meyer. “The question is where do you end up at the end of it? We’re concerned about that because Mexico is our largest customer. Canada is about number four, I think, on the list. So anything that impacts those and then, of course, the TPP is gone. The administration said that they want to basically negotiate bilateral agreements to replace it. That’s going to take a while.”

He thinks right now pork producers on both sides of the borders need to be watching very closely cost of production and the price of pigs, nothing new there, but keep at it.

“We’re set up here with the acreages that are being planted and we have normal weather going through the summer, we’re going to have very large crops and even a lower cost of production than we’ve had for the last 12 months.” •

— By Harry Siemens