Des Moines Register
04-01-06
Hog industry in Iowa logs 26th month of profit
The state would tie its longest profitable streak if the run reaches October.
JERRY PERKINS
REGISTER FARM EDITOR
With 26 consecutive months of profits, Iowa hog producers may be nearing a
record for good times.
The U.S. Department of Agriculture's quarterly hog and pigs report released
Friday showed that despite the second-longest run of consecutive months of
profit since records have been kept, hog producers' expansion plans are still
subdued.
That makes prospects for continued profits rosy until later this year, hog industry
analysts said.
John Lawrence, an Iowa State University economist, said that if hog
producers resist overexpansion during the rest of this year and if corn prices
don't rise too high, profits in the hog industry should continue until October.
That's when Iowa's hog producers would tie the record for the longest streak of
profitable hog production, which ran from December 1976 through August 1979.
"We've had a disciplined industry," said Lawrence, who estimates monthly profits
and losses for Iowa's hog producers.
The Agriculture Department report showed that the number of hogs and pigs on
U.S. farms on March 1 increased 1percent from a year ago, to 60.1million head.
Iowa, the leading hog-production state, had a 1percent increase in its hog
inventory from 2005, to 16.3million head.
A key indicator that analysts watch for potential expansion is the number of
breeding hogs that producers keep for producing more pigs.
Iowa and Indiana reported the largest increases, with both states adding 20,000
breeding hogs from a year ago.
With Missouri up 15,000 and Colorado, Kansas, North Carolina and South
Dakota up 10,000 each, there is potential for more hogs going to market in the
coming months, Lawrence said.
"A couple of profitable years has put some optimism back into the industry," he
said.
However, Chris Hurt of Purdue University said he doesn't see a major change in
the supply of hogs going to market until the last three months of the year, when
hog prices might go lower.
Despite hog producers holding the line on expansion plans, hog prices have
dropped from a year ago.
Bob Brown, an independent market economist from Edmond, Okla., said hog
prices are down 16 percent compared with a year ago because pork exports are
down and supplies of beef and poultry are up.
That kind of competition will put pressure on pork consumption at the
supermarket, unless retailers feature special sales of pork cuts, Hurt said.
All three analysts, speaking on a National Pork Board teleconference call, agreed
that hog prices will be in profitable ranges until late this year.
"We're good through Labor Day, but I have some concerns about the fourth
quarter, especially if we get some higher corn prices," Lawrence said.
An Agriculture Department report released Friday predicted a decrease in corn
plantings, which led to predictions of prices topping $3 a bushel.
Consumer impact
Pork retail prices are not falling as fast as prices paid to hog producers, but
shoppers could see some retail prices come down through specials, said John
Lawrence, Iowa State University economist.
Chris Hurt of Purdue University said supplies of beef, poultry and pork are up.
"That's going to be a wonderful opportunity for retailers to lower prices at the
supermarket," he said.