The Chicago Mercantile Exchange’s Daily Livestock Report (DLR) takes a look at the longest streak of profitability in the hog industry in 20 years.
According to the DLR, published by Steve Meyer and Len Steiner, hog production has been profitable for the past three consecutive years. By all indications, growth has remained moderate in spite of record profits. The publishers credit three factors with the long-term success of the industry including steady moderate supply growth, significant export expansion and low feed costs.
The feed cost advantage is likely to go away as soon as forward feed purchases expire and producers are faced with $3.50 corn. The pace of growth, however, is expected to continue to remain moderate driven largely by capacity brought online in early 2006. Meyer and Steiner expect to see continued export growth in 2007 and 2008.
According to the USDA’s latest Quarterly Hogs and Pigs Report, the December 1 breeding herd was 1.3% larger than a year ago marking the fourth consecutive quarter of moderate growth. Likewise, the December market herd is 1.1% larger than last year indicating future increases in slaughter numbers. Also, the average number of pigs saved per litter for the Sep-Nov quarter (9.13 pigs) is the largest ever for the Sep-Nov quarter.
Source:
CME, DLR
December 26 and 27, 2006
http://www.dailylivestockreport.com/