Des Moines Register
09-30-06
Hog profits continue despite larger herds
The number of hogs and pigs on Iowa farms is at its highest in 51 years.
By JERRY PERKINS
REGISTER FARM EDITOR
Despite raising the largest number of hogs in 51 years, Iowa hog producers
appear headed for a record number of consecutive months of profit.
The U.S. Department of Agriculture's quarterly hogs and pigs report released
Friday said that on Sept. 1 there were 16.9 million hogs and pigs on Iowa farms.
That's an increase of about 2 percent from a year ago, and more than 2 percent
from June 1.
The USDA said that's the largest number of Iowa hogs since September 1955,
when there were 17.2 million hogs and pigs on Iowa farms. It is the third largest
Iowa hog inventory since estimates began in 1866.
There were 62.7 million hogs on U.S. farms on Sept. 1, the USDA report said.
That's a 1 percent increase from a year ago.
Despite the larger number of hogs on farms, analysts said they expect hog
operations to stay profitable at least through June 2007, which would set a new
record for consecutive months of profitability.
Returns to Iowa hog producers compiled by Iowa State University Extension
show that January 2004 was the last month Iowa hog producers lost money.
Farrow-to-finish hog producers in Iowa have had a profitable 10 years, Iowa
State statistics show, with average returns for the last 10 years of $2.50 for each
hog sold.
Shane Ellis, Iowa State Extension economist, said Friday's USDA report
shows that hog profits in the fourth quarter won't be as high as they have been in
the previous three months, but they should stay in profitable territory.
"As long as corn prices don't get too out of hand and feeder pigs don't get too
expensive, producers should be profitable through this year and into June next
year," Ellis said.
Len Steiner, president of Steiner & Co. in Manchester, N.H., said the pork export
market will be a key to hog prices.
The U.S. dollar's value has dropped in relation to the Euro, Steiner said, and that
has made U.S. pork prices more competitive.
"If exports continue to grow, and we think they will, that will be supportive to
prices," he said.
Also, poultry supplies will decrease, prices will increase, and that will mean less
competition for pork, Steiner said.
Glenn Grimes, Extension livestock marketing economist at the University of
Missouri in Columbia, said that hog producers aren't expanding their operations
despite prolonged profits.
The cost of building new facilities is high, and getting permits continues to be a
slow process, Grimes said.
Some large producers are expanding, he said, but many small producers are
exiting the industry and offsetting some of the growth of the larger producers.
Any increase in pork production in recent years has been due to exports, Grimes
said.