Right now hog prices are high and demand is strong and it looks like nothing could harm that. But exceeding packer capacity in the fourth quarter could cause prices to drop dramatically, as it has in the past.
It looks like pork producers will be fine in 2005, though some days in the fourth quarter could challenge packer capacity.
A recent National Pork Board study shows current packer capacity is 407,875 head per day. That covers federally inspected slaughter plants which cover the vast majority of the slaughter capacity.
While current estimates expect slaughter capacity to be pushed but not exceeded, the fourth quarter of 2005 will see huge slaughter numbers. USDA’s Hogs and Pigs reports have shown slight increases in breeding herd and farrowing expectations over last year. That’s not bad, but remember last year was record high pork production.
As it stands adding a few Saturday kills in the fourth quarter will probably ease any packer capacity tensions. Expect prices to dip during this time, but not crash.
Slaughter capacity may increase by next year, as a new plant in St. Joseph, Mo., is scheduled to open in late 2005. This plant will add capacity of about 8,000 head per day, when functioning at full capacity.
The survey showed that the top four pork packing companies have 64.7 percent of the U.S. hog slaughtering capacity. The top eight firms cover 82.5 percent of total harvest capacity.