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Corn Price Rises Could Hit Increasing US Pork Production

by 5m Editor
1 February 2008, at 12:00am

By Chris Harris, Senior Editor ThePigSite. The US pig meat industry is continuing to produce more and more meat with fewer and fewer livestock numbers.

Speaking at the Outlook 2008 conference in London, meat industry consultant, John Nalivka from Sterling Marketing in the USA said that production per breeding sow is increasing so that the country is producing a greater amount of pork from its breeding stock.

Now the number of farrowing sows has fallen to 3.05 million compared to more than 3.5 million in the 1980's. At the same time the average number of pigs per litter has risen to 9.2 from just over seven in the same period.

The industry has been experiencing record returns for its pig meat for the last two or three years.

In 2004, producers were receiving more than $30 per hear rising to more than $40 per head in 2005. Last year he said the prices fell to just over $10 per head and he forecast that there could be losses for producers this year.

"We have seen record returns for producers for the last two or three years," said Mr Nalivka.

"But now with feed costs going up things could be on the turn."

Over the last decade, the US industry has seen both the supply and use of corn increase significantly, with supply reaching more than 14 billion bushels over the last year.

However, much of the demand has been driven by the US requirement for corn for ethanol production and in the coming year, Mr Nalivka said, the USDA projects that 5.5 billion bushels will be produced for ethanol production alone.

This demand for corn for ethanol, taking away from the corn for feed has forced prices up from around $2.20 in 2005/06 to more than $4 a bushel this year.

Mr Nalivka said that in the past there had been peaks in the price of corn that had been forced by droughts and shortages in the US, but the ethanol demand is now driving prices higher and higher.

Mr Nalivka showed the conference that the US pig meat industry is concentrating in the hands of a small number of larger processors, with Smithfield Foods taking the lions share of the industry with 30 per cent, IBP/Tyson holds 17.7 per cent and the Brazilian owned JBS has 10.4 per cent, with Hormel, 9.7 per cent and Cargill 7.7 per cent. The industry has a slaughter capacity of 113 million pigs per year and although this has been increased in the last year, the industry is running close to full capacity.

"We are bumping slaughter right up to capacity," he said.

"The packers have done pretty well."

The slaughter figures also include about 10 million pigs that come across the border from Canada and which when slaughtered become US produce. These imports have risen by 28 per cent over the last year.

He added that the by-product trade for pigs has been buoyant and export trade has also been boosted by the drop in the dollar on world currencies. In 2006 pig meat exports rose by 13 per cent and by another five per cent last year and are expected to side by 16 per cent more this year, reaching about 3.75 billion pounds. Imports on the other hand have been fairly stable over the last decade. In all, Mr Nalivka said, the US has a dominant share of world pork exports with 27 per cent.

January 2008