Pork producers are capitalizing on cheap feed and increased exports
By Kate Ayers
Staff Writer
Farms.com
Iowa pork producers are scaling up their barns in light of lower-cost feed supplies and booming pork exports.
As a result of increased revenues, pig building permits have risen to a five-year high in Iowa, data from the Iowa Department of Natural Resources (DNR) suggests.
Approvals for new pig barns that can house over 1,250 head, as well as for the expansion of existing barns totalled 451 in 2017, according to the DNR. Construction increased by 12 percent from 2016, according to a Reuters article on Thursday.
The number of hogs in the U.S. reached an all-time high of 73.2 million as of Dec. 1, 2017, the U.S. Department of Agriculture reported.
Also, corn prices are sitting around US$3.50 per bushel. American pork exports between January and November of 2017 were on target for a new volume record of 2.23 million tonnes with a total price tag of $5.9 billion, according to U.S. Meat Export Federation data.
In addition, pork producers benefited from last year’s 8 percent growth in slaughter capacity.
“A solid hog market, coupled with low-cost feed, have allowed producers to make money while chasing this capacity,” John Nalivka, president of Oregon-based Sterling Marketing, explained in the article.
In Iowa, he expects slaughter capacity to increase an additional 6 percent this year when another plant is operational in the state.
“The thinking is that the ‘wealth effect’ on demand will be more than sufficient to gobble up all that meat – despite the big supplies,” Dan Norcini, Chicago Mercantile Exchange livestock futures trader, said in the article.
Last year, pork producers made an average of $21 per head on hogs sold to packers, compared to $5 the previous year, Nalivka said in the article.