After news of a strong export sale, the Quarterly Hog and Pigs Report from USDA shows pork producers were not quick to react to the production cost challenges of 2012.
While market hog inventory was down 2% from last quarter at 60.5 million head, breeding inventory remained slightly higher, at 5.82 million head.
Producers are using more risk management tools, explains Steve Meyer, Paragon Economics.
"Many current producers have started actively managing risk and managing margins on a forward contract basis. A good portion of them came out of 2008 and 2009 in relatively good shape, even though the industry as a whole was hurt very badly. Producers came into this fall with a staying power that many of us did not expect," Meyer says.
Producers have also not made much change to sow herd numbers, due partly to larger facilities and long range planning. "These numbers show us there is a little bit of expansion in the breeding herd and we’ve seen that come up in the levels of sow slaughter and gilt retention in the last few months," he adds.
"These producers are hog producers, and they plan to stay that way. Everything is on the line—with hopes for strong exports and timely rain for the 2013 corn crop," he concludes.
Sigh of Relief—October Pork Exports Higher
An unexpected Christmas present came early for hog producers, as October’s pork export numbers were released mid-December, with a good bump in export traffic.
In the latest monthly export results (October), the combined total of U.S. pork muscle cut and pork variety meat exports was record-large in both volume (218,312 metric tons) and value ($607.3 million).
"The blessing of our international marketing efforts, together with MEF and the Pork Checkoff, could not have come at a better time," says Chris Novak, CEO with the National Pork Board, during an interview with the U.S. Meat Export Federation. "We are getting what we need from the international marketplace at a critical time. With the drought, our producers have faced this year—high feed prices, again—we are seeing international markets respond to the value of our current pork supplies. At the endof the day, the quality—the leanness—of U.S. pork keeps our international customers coming back."