| Iowa Farm Outlook & News | Iowa State University |
University Extension |
| Headlines: | December Estimated Returns: Farrow to Finish -$14/hd, Yearling -$67/hd | ||||||||||||||||||||||||||||||||||||
| Dec Hog & Pig Report: All Swine Down 2%, Market hogs Down 1.8%, Breeding Hogs Down 3.5% | |||||||||||||||||||||||||||||||||||||
Newsletter |
Livestock |
Crops |
|||||||||||||||||||||||||||||||||||
|
Crop Markets Remain Under Pressure Recent Labor Force Conditions in Iowa Previous Issues |
Expected impact of Morrell plant closing on hog prices (01/21/10) Hog producers in the region will also be impacted, but not as dramatically as might be expected. It is never good for a seller to lose a buyer and the reduction in packer capacity is expected to have a small negative impact on the basis compared to what would have been had the plant remained open. Hog producers selling to the plant will have to find another buyer and may have higher transportation cost to ship to a more distant plant. In addition, producers that have do not have a track record with a buyer may will want to start shopping around early to determine where their hogs do best. The closing of this plant will more closely match slaughter capacity to production on a national level. The Sioux City plant processed approximately 4 million hogs per year. That is nearly equal to the expected decrease in US commercial slaughter in 2010 compared to 2008. The smaller supplies will result in higher hog prices over all. Pork producers have experienced a devastating losses beginning in October 2007, losing money in 25 of the 27 months. Prices neared breakeven for most producers on the recent rally in hog prices at about the same time as the announcement of the plant closing. The plant will not close until April which should soften the blow for producers as hog prices typically increase seasonally to higher prices in the summer. In addition to higher prices on smaller national supplies, individual packers may bid more aggressively to assure their plant has enough hogs to run efficiently as supplies declined depending on local supply and demand conditions. The closing will reduce demand for hogs in the region, but there are seven plants within 100 miles of Sioux City representing five different companies (Table 1). There are more plants further east and south that will also need hogs, thus there should continue to be sufficient competition for hogs in the region. Table 1. Pork packing plants within 100 miles of the John Morrell Sioux City, Iowa Plant and their estimated daily capacity
* Source: Steve Meyer, Paragon Economics, 2006 |
February Update (2/9/10)
|
|||||||||||||||||||||||||||||||||||
Adobe
Acrobat is required to view many IFO articles. Download free
Acrobat Reader here.
Email us with questions or comments
Email notification request