DES MOINES, Iowa – In a teleconference organized by the National Pork Board immediately following the release of the Quarterly Hogs and Pigs report Friday, participants had a few key takeaways.
For one, President of Procurement Strategies, Kevin Bost, simply did not believe the 2.4 percent decline in winter-to-spring farrowings, now at 2.79 million head and down from 2.86 million head in the last report.
“Going back to 1975,” said Bost, “I can only find one other year in which farrowings from [the Dec-Feb period to the March-May period] declined at all, and never this much.”
Bost pointed out that the number appeared to be unrelated to porcine epidemic diarrhea virus (PEDv), as he argued the pigs per litter number seemed to make sense.
Department of Agriculture Economics Professor Chris Hurt at Purdue University found the report to show no signs of expansion in the breeding herd, but did highlight one good problem pork producers will have to contend with this year.
“One thing we have seen with pork producers,” Hurt explained, “they dug a deep financial hole with expensive corn, and for some, it’s taking some time to get out of that financial hole. Could be their bank lender is just not willing to let them expand. But I think that, as we get to the last half of this year, that cash flow is really going to be putting them back in a strong finanacial position, so it’s not too early to start getting their CPA ready to think about income tax management.”
Given the supply outlook for the next few quarters, Senior Analyst with Hisgraiincommodities.com Victor Aideyan said now is the time to lock in profits.
“To me, anyway, the rational person in the industry should be looking for opportunities to do some serious hedging, at least over the winter; at the very least over the winter period, when we know we’re going to have a lot more pigs than we have now.”
Of note in the Iowa Hogs and Pigs report: the average pigs saved per litter rebounded to 10.6 piglets; levels not seen since before the recent supply shortages due to the outbreak of PEDv.
To hear more reactions to the Quarterly Hogs and Pigs report, click here.
