Pork rebounds from PED, but margins still tight

BY BROOKS TAYLOR

Mt. Pleasant News

While the Iowa pork industry has rebounded from the porcine epidemic diarrhea virus (PED) that impacted swine production last year, Colin Johnson, an Iowa State University Extension swine specialist, said profit margins still would remain tight for producers.

That being said, the industry is in much better shape than it was a year ago, Johnson noted.

?Our inventory numbers are up, we have rebounded from PED, feed costs are lower and more hogs are coming from the farrowing house,? summed up Johnson.

PED, which hampered the industry last year, is caused by a coronavirus. The virus is widespread in Europe and damages the villi in the gut, thus reducing the absorptive surface, with the loss of fluid and dehydration, according to ?The Pig Site,? a publication serving the swine industry.

Acute outbreaks of diarrhea occur when the virus is first introduced in a susceptible population, according to The Pig Site. In some cases, 100 percent of sows may be affected. The disease can have a mortality rate of up to 40 percent.

The virus, Johnson said, did have a silver lining. ?It taught producers to step up their game when it came to bio-security. They kept things clean, limited their exposure and were able to slow the virus down.?

Johnson said there were many question marks dogging the swine industry at the beginning of the year.

?We didn?t know how quickly we would recover from PED,? he began. ?It takes nine months for a hog to go from breeding to market. We came through the winter and spring well and put more hogs on the market than we thought.?

Nationally, swine inventory is up about four percent from last year, Johnson said, and although he didn?t have access to Iowa numbers, he said Iowa?s increase in inventory would rival the national increase.

Exports have remained strong, even in China, the leading exporter of U.S. pork. Currently, China is experiencing some economic difficulties, but Johnson said that has not yet shown up in exports.

?I really don?t know if the economic problems in China are real or hyped up. They are the leading importers of U.S. pork in terms of volume, while Japan is the leader in terms of value,? the specialist said. ?Japan imports a lot of our more expensive cuts, such as loins.?

China is also the leading pork producing nation, but still has a strong need for U.S. pork because of its population. ?They have so many people over there and the Chinese want protein. It is a staple of their diet and the preferred meat,? he explained.

Ranking behind China and Japan in U.S. port imports are South Korea, Canada and Mexico, the specialist said.

?We have seen increased exports every year,? Johnson said, ?Sometimes as much as 20 percent. It?s been very steady (in terms) of exports, even in years when we didn?t have as many pigs.?

Why the increase in exports annually? ?It?s because American producers raise quality pork,? answered Johnson.

With a record corn and soybean harvest predicted this year, Johnson expects the abundance of corn and soybean to drive down feed costs, which he said is a huge benefit to swine producers. ?Some 70 percent of the cost of raising pigs is in feed costs and 90 percent of that feed is corn or soybeans.?

Although pork may not be as popular as beef in Americans? diets, he said there has been steady consumption of pork domestically. ?We do extensive marketing of pork,? Johnson commented. ?American consumers have really been consistent. They still consume a lot of beef, though. However, Americans? demand for bacon is unreal and ground pork is used on a lot of things.?

Despite lower input costs (feed, primarily), Johnson said he expects a tight short-term future for producers.

?It all comes down to supply and demand,? he said. ?The prices were decent at the beginning of the year, due to lower inventory, but the market began softening in the early summer. I think prices will hold steady even through October traditionally has the lowest pork prices because that is when the highest number of hogs go to market.

?Pigs born in the spring have the greatest rate of survival,? he continued. ?We also had a good summer, it wasn?t too hot, and the pigs were healthy and ate well.?

With the grain harvest looking bountiful, Johnson said a strong harvest would mean lower input costs next year. But he quickly added that he doesn?t see strong margins for producers in the months ahead.

?While margins may not be strong, in Iowa even when there is not a lot of profit, there are other ways to reduce farming costs such as using manure on feeds to save money on fertilizer,? he concluded.