US pig farmers may face lower hog prices in late 2017

USDA forecast that hog prices may be US$43 to US$47 per cwt in the third quarter, which is nearly nine percent below last year.

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photo by Fredex | BigStockPhoto
photo by Fredex | BigStockPhoto

As 2017 progresses, two forces may combine to put abundant pork on the menu in the United States and US export markets, but may lower hog prices for farmers, according to US Department of Agriculture (USDA) analysts in the April “Livestock, Dairy and Poultry Outlook.”

Large pig herds and increasing processing capacity may form a perfect storm of pork production in the US later this year, which USDA analysts suggested will lower hog prices for US pig farmers. USDA forecast that hog prices may be US$43 to US$47 per cwt in the third quarter, which is nearly nine percent below last year. USDA analysts expect that hog prices will be US$36 to US$38 per cwt in the fourth quarter, slightly lower than the same time period the year before.

Pork processing capacity increase coming

Several pig processing plants are under construction in the US Midwest, noted USDA analysts. Some of these large packing plants are scheduled to begin operations later this year, and will help process the ever-growing number of pigs in the US.

US pig herd growing since 2011

USDA’s “Quarterly Hogs and Pigs” report highlighted year-over-year larger inventories of market hogs and breeding animals in the US, which suggests large second-half 2017 pork production. One contributing factor was December-February farrowings that exceeded those indicated in the previous report. These farrowings resulted in a four percent larger December-February pig harvest than expected. This nationwide US pig herd growth continues a trend that started in 2011.

Since 2011, the US pork industry added approximately 275 thousand animals to its breeding inventory. Meanwhile, average litter rates increased from 9.78 to 10.5 pigs in 2016. Considering these increases, USDA analysts expect third-quarter 2017 pork production to hit 6.4 billion pounds, more than five percent higher than last year. Fourth-quarter production may reach a record-high seven billion pounds.

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