Profitability and what’s going on in the marketplace are always part of the conversation when producers gather at World Pork Expo. Christine McCracken, protein analyst from Rabobank, visited with AgriTalk’s host, Chip Flory, last week to discuss the pork industry, including hog weights, supply and export markets.
“We’ve had some really nice weather here, which is putting a little bit more weight on pigs,” McCracken says. “I think there’s some concern right now because weights have been coming up. I do see it as a temporary situation tied to nice weather. When you look at export markets, they continue to be good. I think that’s a good story and remains a good story.”
With beef and chicken supplies being tight, there is optimism for domestic pork demand. “Domestic demand could be a little better, to be honest, but we think that’ll pick up as we move into the back half [of the year],” she says.
“You know, we’ve had really good productivity, that’s the reality,” McCracken says. “That’s been a function of this really great health.”
Every time the industry gets a 1% cut in the number of sows, it creates a 1.5% increase in the number of pigs per liter, she adds. That’s more pork and pigs getting heavier. The question is then, do we only have a demand issue?
“You’ve got to balance supply and demand. Demand domestically, we haven’t been able to move all that in the short run. But we look at it as a temporary situation, and it’s still good. It’s not as bad as it was last year. We’re sitting in a much better spot today.”
With the economy as is and consumers feeling a pinch in their grocery budget, Flory wonders why consumers tend to trend from beef to chicken versus beef to pork?
“I think a lot of that stems from what they are comfortable with,” McCracken says. “The reality is not everybody can cook pork. We’ve come a long way in terms of education efforts and trying to improve that. People want things convenient and easy to prepare, and that’s not always pork.”
She says finding ways to get pork on the consumers’ plate can help make the difference, whether it’s ground pork or getting more pork on smokers.
“I think all kinds of efforts are ongoing, but it’s a slow-moving ship,” McCracken says. “It’s not something we’re going to fix overnight.”
Being comfortable with pork has been helpful when looking at the Mexico market, which is a strong importer of U.S. pork.
“Part of that is because they love pork, they use it in everything, but they aren’t self-sufficient,” McCracken says. “They continue to have health challenges down there that limit their production. So, it continues to be a great market.”
A few other factors contribute to Mexico’s pork demand, including avian influenza outbreaks, which are pushing up chicken prices. The U.S. is also a good supplier of pork that is competitively priced. Even with a new president in Mexico, McCracken sees the country continuing as a vital part of the U.S. export market.
McCracken points out that producers are in a good spot now and recommends looking at managing risk as another way to increase profitability.
“I do think there are some ways to make money,” she says. “I do think producers are sitting in pretty good shape. They need to be managing risk. There are some things you can do to protect your margins and now might be a good time for that.”
