A record profit streak in the pork industry that hasn’t been nipped by over-expansion or a slowdown in exports is projected to continue in the near future.

“The latest USDA Hogs and Pigs Report was basically neutral with slightly higher breeding herd numbers,” notes Glenn Grimes, a University of Missouri Extension agricultural economist.

The U.S. inventory of all hogs and pigs on Sept. 1, 2006, was 62.7 million head, up 1 percent from a year ago and up 2 percent from June 1 of this year. The breeding inventory, at 6.08 million head, was up 2 percent from last year and up slightly from the previous quarter. 

While North Carolina has continued to depopulate its swine herd since late 2004, Iowa’s swine herd continues to grow. “A big part of this involves imports of feeder pigs from Canada,” notes Len Steiner, president of the Manchester, N.H.-based Steiner & Company, who adds that Canada will provide more than 8 percent of all the hogs that are processed in U.S. plants this year. 

A push/pull factor is hastening the arrival of more pigs from Canada. The exchange rate is the push factor that’s prompting Canadian producers to sell feeder and weaned pigs to U.S. producers or form retained ownership arrangements with business partners in the Midwest, says Victor Aideyan, with Farms.com Risk Management in London, Ontario, Canada. “This gives Canadian producers the chance to make more money,” he says.

The pull factor is the increased construction of finishing barns in the Midwest, especially among producers who want to utilize the swine manure on crop fields. While producers running large operations continue to grow, expansion has tempered by the cost of building new swine barns and the slow process of acquiring permits, Grimes adds.

He adds that "we don't really know the rate of smaller producers exiting the industry."

While USDA forecasts U.S. pork exports will increase into 2007, but analysts believe growth won’t be as strong as it has in the past. “The export market is key, and U.S. producers will benefit from a weak dollar and a strong Euro,” Steiner says.

On the home front, changes in the poultry industry may influence pork demand in the months ahead. “We saw earlier this year that chicken is willing to cut production, and I suspect they’ll do it again to support prices,” Steiner says.

Source: National Pork Board