The Cattle Range Home Page
October 2, 2017
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Hog Expansion Spells Trouble

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Hog Expansion Spells Trouble
Successful Farming

There are two kinds of producers in the hog industry today -- those who are expanding and those who wish others weren’t expanding.

Either way, the pig supply is growing big time. The annual exclusive Pork Powerhouses 2017 ranking of the 40 largest U.S. producers shows there are 246,850 more sows among these companies than one year ago. Almost two-thirds of the producers, 25 out of 40, have added sows. Only six companies reduced numbers.

The last time the Pork Powerhouses list grew by this much was in 2006. That growth led to a market collapse and cutbacks in sow numbers by 2008. Going further back, the biggest year ever for sow expansion among the Pork Powerhouses list was in 1998 when the largest producers added a half a million sows. Remember what happened late that year?

There is one big difference in the industry today vs 10 and 20 years ago. Two new large packing plants opened in September, Clemens Food Group in Coldwater, Michigan, and Seaboard Triumph Foods in Sioux City, Iowa. A third, Prestage Foods of Iowa, and maybe even a fourth (to be announced soon) could be killing hogs in a year or three.

Never before in the pork industry has there been this kind of packing plant expansion, live production expansion, and absolute necessity of export expansion in the presence of cheap grain. Cheap grain often breaks more people than expensive grain, say industry experts, because it encourages expansion. Companies get bullish when grain is cheap.

However, at the end of the day, somebody has to eat the pork. To get more people eating more pork, you have to lower prices.

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