Schmitt: Hog futures recovering
By CLAYTON RYE
GARNER – When Jamie Schmidt, of Garner, was president of the Iowa Pork Producers Association he made a prediction.
When asked about what the future held for pork producers, he said that due to expansion of the nation’s hog inventory and low feed costs, hog prices could decline to near breakeven in the coming year.
A year later, Jamie Schmidt is the past president of IPPA and his fears of declining prices became true.
The October 2015 live hog contract closed at $81 on Nov. 3, 2014.
It closed at $63.73 on July 1 and as of Oct. 1, the contract had recovered to $74.30.
In addition to price volatility, hog producers have had to contend with hog diseases in recent years with porcine reproductive respiratory syndrome and porcine epidemic diarrhea virus.
Schmidt said the situation with PEDv right now is “pretty calm.”
“I’m hoping everybody gets through the coming season without an outbreak.”
Schmidt said a new strain of PRRS has been found in southeast Iowa and could be more significant than PEDv.
He said the U.S. Department of Agriculture is searching for a source of PEDv and is currently looking into contaminated shipping containers arriving from overseas.
But the biggest problem facing hog producers now is not due to expansion or disease.
“The strong dollar is hurting us as much as anything,” said Jamie Schmidt. “Our products are too expensive for the world market.”
The recently completed Trans-Pacific Partnership agreement holds promise for hog exports, according to Schmidt.
“In the longer term, it looks good,” he said.
Schmidt is hopeful hog exports will return to previous levels in purchases by China.
With improved prices, Jamie Schmidt is taking a cautiously optimistic view.
He believes an expansion rate of not more than 3 percent would not harm prices.
An IPPA press release echoed Schmidt’s sentiments with the following by Iowa State University Extension livestock economist Lee Schulz:
“With the Iowa breeding herd estimate, the same as in June and 2.9 percent below year-ago levels, producers appear to be showing self-control during this expansion phase recognizing that the excellent returns in 2014 were unusual circumstances and, therefore, are cautious about expanding.
“The same can be said regarding both the U.S. and Iowa farrowing intentions, which are smaller than last year.”
Hog producers who are thinking about a large-scale expansion may not see a quick return, said Schmidt.
“They could be running at breakeven for a while,” he said.
On Schmidt’s own hog operation, a couple of finishing buildings were built this summer. His hog numbers are remaining the same.
On the demand side, two additional packing plants, one in Sioux City and the other in Michigan, will add to the U.S. kill capacity.
Jamie Schmidt, 57, has been on the IPPA directors board for nine years with six of those years serving as an officer.
He said recent IPPA activities by have been working on the nutrient reduction efforts to reduce runoff in streams.
“We are encouraging producers to be prudent in managing their manure,” he said.
IPPA has joined the Iowa Ag Literacy Alliance, created to educate youth about all segments of agriculture.
The pork producers will be emphasizing pork as a product and animal care.
“More and more people are removed from the farm,” said Schmidt.
October was established as pork month because it was traditionally when pork supplies were most abundant and was designated as the month to feature pork and pork products.
“We’re always working on promotion,” he said.
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