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Wonder Why Pork is cheap?

Listen Here: Profit Matters 12-29-16

Domestic pigs piglets

The supply of hogs is sky high. The latest USDA report, just out last Friday, shows total swine inventory is 71.5 million head, 4 percent over last year and a record high number.

It doesn’t take too many breeding animals to flood the market with pigs. There just over 6 million sows. That is up 1.5 % from last year but the sows are weaning over 10 pigs per litter and the average almost 2.5 litters per year. If do the math, the numbers are huge.

The cost of feed has gone down since 2015 so that may account for why so many hogs are being produced. Still, the market price indicates there are losses at this level of production even with lower costs and higher weaning rates.

According to USDA’s Hogs and Pigs Report, the total swine inventory on December 1 was 71.5 million head. That is a four percent increase from last year and a record high. The breeding herd inventory was just over 6 million head, up 1.5 percent from last year. The market hog supply at 65.4 million head, was up four percent from December of 2015. Iowa Farm Bureau director of research and commodity services David Miller expects the productivity gains seen in the swine industry to continue.

“I think we continue to get advances in genetics that are able to push this 1-1.5% gains that we see in liter per sow, better return rates on breeding. We are seeing sustain gains.”

With the large supplies, there is concern about packer capacity and the industry’s ability to handle these numbers. Packer capacity is generally seen at 2.5 million head per week. Purdue University agriculture economist Chris Hurt does not expect packing capacity to be exceeded in 2017.

“We are going to be looking at bringing on more process capacity in the second half of 2017,” says Hurt.

Hog markets are expected to be under pressure to begin this week, impacted by the surprising USDA report. Sterling Marketing President John Nalivka says the entire protein complex is dealing big supplies.

“It’s not just pork we are producing more of, it’s total meat. We have expanded the beef heard progressively, and with these lower feed costs we are expanding out poultry production.”

For more information, producers can contact the Pork Checkoff Service Center. Go to pork.org or call 800-456-PORK.