Sort & Cull

Be Careful What You Wish For

John Harrington
By  John Harrington , DTN Livestock Analyst

Pork dreamers like Seaboard, Triumph Foods, and Clemens Food Group began to blow at candles nearly three years ago this spring. Whether these corporate wishers had their eyes closed or not remains to be seen.

Several years later, managers of farrowing barns and finishing floors started to aggressively cross their fingers and bet on shooting stars.

It didn't take long after this for USDA to officially confirm that all these expansionary pleas has been granted in spades. Regardless whether you thank Tinker Bell, the Tooth Fairy, or good old American greed, the infrastructure and animal inventory are now firmly in place to slaughter and process a record 126 million hogs in 2018.

The March 1 quarterly inventory (i.e., all hogs totaled 3% greater than last year) just release represents the latest marker that growth in pork production remains in high gear. Clearly, the production machine processors and producers have wished-into-being, standing tall as the biggest supply machine the country has ever put together.

Yet as cash and product sagged over the last third of the first quarter, you can bet more than a few visionaries have paused to clean their glasses and check the road map.

Since greater chain speed naturally requires a greater population of market hogs, the initial expansion of the supply channel can sponsor higher country prices -- at least for a while.

Indeed, producers can expect a few more rounds of tube-filling help over the remaining nine months of current year. First of all, Seaboard/Triumph has started to hire for a second slaughter shift at Sioux City. Second, Prestage's new plant now under construction in north-central Iowa is expected to have blood on the floor sometime late in the fourth quarter.

Between simply finding enough workers and getting them trained, most assume that Sioux City's second shift won't even get started before mid-June. If everything goes right, the shift could be knocking on the door of full capacity (i.e., 10,000 head) by late summer.

The launching of the Prestage plant (another 10,000 head potential) is considerably more iffy. Although it appeared that walls and roof were in place before the recent winter turned bad, some have suggested that the pace of construction has slowed in recent months, possibly due to market uncertainties.

Who knows? But you can certainly hear speculation that Prestage may not throw out the first carcass until early 2019.

Yet these incremental increases in further pork production almost seems beside the point. Expansionary feet are already very wet. Whether the water rises to the knee or mid-thigh, the hugely pregnant question remains the same: Can the U.S. pork industry secure and hold enough product demand to make the expansion model profitably sustainable?

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