Depressed prices for U.S. baby pigs signal troubled hog market

Mon Aug 22, 2016 1:23pm EDT
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By Theopolis Waters

CHICAGO Aug 22 (Reuters) - U.S. hog farms devastated by a swine virus three years ago have rebuilt their herds to record levels, an accomplishment that has brought equally formidable problems.

The value of young "feeder" pigs weighing 10 to 12 pounds, the building block of the U.S. pork sector, has plunged by nearly three-quarters this year, according to U.S. Department of Agriculture data.

This is the latest pain point for a sector that has struggled to bounce back from the Porcine Epidemic Diarrhea virus outbreak, which has killed an estimated 8 million pigs since May 2013.

Cheaper feed grain prices, including a 60 percent plunge for corn since 2012, also convinced farmers to increase their herds, according to federal data.

But others were also rebuilding, said Iowa State University economist Lee Schulz. Canadian feeder pig imports to the United States are up more than 8 percent so far this year, he noted.

Livestock analysts said packers might be turning their eyes north to take advantage of the strong U.S. dollar.

Competition from other U.S. protein producers also has eroded the pork farmers' gains. Bigger cattle herds and poultry flocks in recent years began to vie for retailer and consumer dollars, industry analysts said.

That heated competition has been eroding slaughter hog prices since early July, which in turn trimmed farmers' profits. As a result, producers looking to add to their herds started to shy away from buying young pigs.   Continued...