Filling New Plant Capacity Requires Export, Demand Growth

September 13, 2017 08:31 AM

Exports and domestic consumer demand for pork will be key to maintain producer profits for the remainder of 2017 and for the first half of 2018, say industry analysts.  Arguably the largest expansions in pork capacity came last week when the Triumph –Seaboard plant in Sioux City, Iowa, and the Clemens Food Group plant in Coldwater, Minn.,  came online. Together they add an unpresented amount of packer capacity for the industry—an additional 22,200 head per day.

While not all of that capacity is up to full operation, and likely won’t be until 2018, it has opened the door for expansion. “As long as the consumer demand is there and the export demand is there, we just need to process those hogs so we're glad to have the new plants in place,” says Arlan Suderman, chief economist, INTLFCStone.

As processing ramps up in the new facilities, its likely producers will keep lock-step with additional head.

“By the third quarter, we’re going to have supplies up 2% over one year ago,” said Dan Roose in a video interview with AgDay. “The fourth quarter, we’re going to be up 4% over a year ago.”

Demand for pork has been increasing globally and domestically, Suderman adds. “Particularly, the bacon craze has been the big driver,” he says. “I think we're approaching the place where we'll start to see that demand start to open up again and provide some underpinning.”

Continued analysis will come later this month. The quarterly hogs and pigs report will likely show and increase in the Iowa and Minnesota areas.






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