High on the hog

by MEAT&POULTRY Staff
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Tiptoeing into a prediction – "I hate to do this, because if you’re wrong you lose and if you’re right someone else takes the credit" – Dermot Hayes, professor of agricultural economics at Iowa State University, said that it’s his "hunch, but no more than that," that pork producers will enjoy good prices in the second half of 2009, possibly continuing into 2010. "They should be better than even, at least." On the flip side, processors "will have to deal with higher livestock prices."

Exports may provide some relief to processors, however, even as U.S. pork shipped abroad helps buoy hog prices at home. Hayes pointed out to MEATPOULTRY.com that high feedgrain and other input costs in 2008 caused production cutbacks around the world, but the chief foreign competitors to U.S. pork, Denmark and Canada, cut back substantially more than the U.S. industry did, leaving U.S. pork with good opportunities in the export market.

He called the higher hog prices an "echo" of the record-high feedgrain prices hog producers were forced to contend with in the summer of 2008. "It takes the world livestock industry about a year to adjust to big changes in input costs," he said. "We’re just now getting the economic results in pork from the corn price spikes." At the same time, the inevitable growth of the hog herd that will result from the high prices will eventually bring down hog prices – but, again, in about a year, according to the ISU economist. Pork will remain relatively expensive for consumers in the interim.

Hayes said that overall, the global animal protein industry could be in for a rough ride in 2009. "Estimates are than protein production will decline 3% this year. That’s a very big deal," he commented. "That’s a tremendous amount of meat taken out of production."

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