When it comes to the markets, supply is a big topic for pork producers. Pork production remains high.
Lee Schulz, Iowa State University Extension livestock marketing specialist, joined AgriTalk’s Chip Flory and Farm Journal’s PORK editor Jennifer Shike to discuss the markets during World Pork Expo.
Schulz says we haven’t seen the reductions in numbers, which could spur prices to increase.
Yes, sow numbers are lower, but productivity is at historic highs. Producers are good at what they do.
“When you pair that with even a reduced sow herd and lower farrowing, our pig crops are still larger,” Schulz says. “That’s why we’re seeing those larger slaughter numbers continue.”
The packers aren’t backing off of the heavy hogs, Flory adds.
“We’ve seen a pretty strong case of hog slaughter as well,” Schulz says. “Hog flows in the system last week were pretty high weights, which has increased production even a little bit more. It’s continued heavy weights and rather large slaughter numbers.”
Disease Pressure is Down
Animal health, biosecurity and management have also helped increase supply. More live pigs are making it through the system, which is a good problem to have.
“Veterinarians are saying that disease pressures have been down this year,” Shike says. “That’s helped us especially as we’ve come out of 2023 and into 2024. Everybody’s quick to say, we can’t let up on biosecurity.”
Since the industry has plenty of hogs, the topic becomes increasing demand, thus increasing prices and profit for producers. Schulz acknowledges the large production numbers has given the U.S. a good position for the export market.
“We have been able to maintain that export flow. When we look worldwide, we’re really the leader now,” he says.
With the European Union (EU) cutting back on pork production, the U.S. has been able to fill that export demand. On the domestic side, Schulz points to consumer income.
“How we measure our demand indices, you go back to the third quarter of 2022,” Schulz says. “That’s where we really started to see demand start to dip post pandemic, and now that’s having an impact on pork demand.”
Schulz quickly shares the U.S. is really coming off historic highs. It’s more recently, in the past seven quarters and comparing year to year, that demand is lower.
“I would still say we’re in a good position, historically,” he says. “But it does give pause that we’re seeing bit weaker prices because of lower demand.
Thankfully the product isn’t filling up cold storage and is still able to move through the export markets.
Several factors play into the EU decreasing production, including regulations and production costs. They have be able to build back, but right now the U.S. can increase market share. With the recent news Germany has another case of African swine fever that cuts their exports as well.
“That really shows the challenges of international trade and the importance of biosecurity. All those things really help protect the swine herd, but also the market access that is so critical to the U.S.,” Schulz says.
Flory adds that in every conversation he has biosecurity comes up. Shike agrees.
“We need to do a better job of being in the barns and letting people know it’s OK to let us know if a breach has happened and something wrong has taken place because we need to create a culture of accountability, but also comfortability with being honest about what’s going on in our barns,” Shike says. “I talk about it all the time, and it seems like we can’t stress it enough.”
Another topic Flory suggests the industry keeps talking about is that 145 degrees is the safe cooking temperature for pork loins.
“Let’s make sure people are cooking pork, right,” he says. “That will help solve some of our demand issues if people have a better understanding of how to put good pork on the table.
Supply. Demand. Biosecurity. All important topics that lead to profitability for pork producers. Schulz remains cautiously optimistic.
“Right now my numbers show we’re about breakeven for the year,” he says. “That’s with some profitability returning throughout the summer. As we get into the fall and tighter slaughter capacity that will seasonally tighten up those profitability numbers and we look to be back to potentially red ink.”
He says the challenges remain.
“April was the only the second profitable month in almost two years,” he admits. “As we think about producers who have been on defense for the past two years, it’s time to think about how and when to go on offense because the market is offering some opportunities.
“It’s about looking at prices, insuring prices or margins and setting several targets to really take advantage of trends in the marketplace,” Schulz adds.
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