Wednesday, September 26, 2012

China storing pork


China is putting pork into cold storage because it expects a global shortage next year.

And the National Pig Association in the United Kingdom says there will be a shortage of pork and bacon next year because of the current crisis on hog farms hit by sky-rocketing feed costs that result from drought reducing this year’s corn harvests in the United States and Russia.

Steve Meyer, an economist based in Iowa, predicts pork prices will hit record highs next year.

At the moment, however, North America’s hog farmers are losing about $40 on every pig they ship to market. Production costs are at least $170 per head, two-thirds of that for feed, and market prices are about $130.

Weaner producers – those who keep sows to produce little pigs that other farmers buy to raise to market weight – are being devastated by the current market. Many buyers are ignoring long-term contracts they signed for weaners and prices have dropped to near give-away levels.

As a result, some of Canada’s largest hog-producing companies are already bankrupt and more are likely to follow before Christmas.

Farmers are shipping entire herds to market because they can’t afford to feed them, and so there will be a much-reduced breeding herd by Christmas time which is why market watchers expect reduced pork supplies next year and higher prices.

Prices may not, however, be high enough to cover the increased costs of feed until next year’s harvests.