Meyer: Pork offers potential 2015 profits
DES MOINES – Through the first three quarters of 2016, profitability in swine production will likely reflect 2015’s level.
But the fourth quarter will bear close watching.
That’s what Dr. Steve Meyer, an analyst for Express Markets Inc., said during a Jan. 27 seminar at the 2016 Iowa Pork Congress in Des Moines.
Meyer said there are several factors that may keep pork production profitable until the final quarter. These include lower costs of grain and good crops since 2007; porcine epidemic diarrhea virus; mandatory country of origin labeling and fourth-quarter predictions of over-supply and tight conditions at the packing plants.
As far as individual species, Meyer said pork remains steady, beef became lower in November, but all in all meat and poultry demand is strong at this time.
Meyer said with current grain prices, this could imply lower hog-producing costs since 2007.
He estimated better operations may keep their farrow-to-finish hog product carcass costs from $61 to $63 per hundredweight.
Meyer predicts $3.50 to $4 a bushel for corn should continue through 2017 making raising pigs affordable.
There should also be an ample supply of soybeans and soybean meal as well.
“The world grain stocks have been restored, so the whole market place is comfortable with the product we have available,” he said.
Pork exports, he said, suffered in the last quarter of 2014 and early 2015, but is currently up to a positive side on year-to-date exports.
“2015 should finish up 3 percent which is not a bad scenario for exports to move forward,” said Meyer. “Victory this year would be 5 percent growth on exports with 1 percent more of products going towards exports this year versus last.”
The cold storage market is bullish for pork, whereas it seems to be bearish for other meat, Meyer said.
Right now, he said, there has been a reduction in hams in cold storage but there seems to be plenty of ribs on hand.
“There is a lot of seasonability with cold storage stocks and we are not concerned with those at this moment,” said Meyer.
PEDv continues to be a concern, Meyer said, with a consensus of veterinarians predicting that 2015-2016 could end up being slightly worse than 2014-2015, but so far this year’s totals are remaining about the same.
Running through the December 2015 USDA quarterly hogs and pigs report, Meyer said “so far, 2016 is looking to be much like 2015, but the fourth quarter could be huge.
“The fourth quarter could be tough, I am seeing tight capacity issue this fall.”
Another issue, Meyer said, is the surge of Canadian hogs coming in to the United States due to the current status of the United States dollar.
“It won’t be a big growth, but there will be some growth,” said Meyer. “There won’t be a flood of hogs from Canada, but there will be more coming in; however, it’s too early to call, but this is something to watch for.”
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