U.S. pork packing plant boom may boost hog prices

Mon Jul 18, 2016 3:17pm EDT
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* Three new, two revamped structures to come on line by 2018

* Healthy packer profit, China demand fuel expansion

* First U.S. pork packing plants to be built since 2004

* Industry interest in ractopamine-free pork to serve China

By Theopolis Waters

CHICAGO, July 18 (Reuters) - The U.S. pork industry could be heading for higher hog prices as processing plants come on line at an unprecedented rate with packers investing millions of dollars to satisfy the appetite of protein-hungry China, industry analysts said.

Pork packers including Seaboard Foods and Triumph Foods, who slaughter hogs and turn them into bacon, pork chops and other products, plan new or expanded plants in the next two years. This building boom could result in an extra 6 percent added to capacity by the end of 2017 compared with 2015 levels.

Another 1.8 percent of capacity will be added when Prestage Farms completes its new plant, said Steve Meyer, pork analyst at Indiana-based EMI Analytics. Prestage plans a plant that can process 10,000 pigs a day but it is still looking for a site and there is no completion date.

"Those companies have been profitable so they want to grow," said Meyer. Average gross margins for packers jumped to $28.88 per head from 2009 to the present, compared with $20.37 from 1999 through 2008, he said. He declined to project how margins would fare in the future.   Continued...