A new report out from CoBank says rising global demand for pork and stronger profitability will create a strong incentive for American pork processors to expand their capacity. Increased competition among processors may lead to a tightening of packer margins and give producers much more favorable prices in the months ahead. CoBank economist Trevor Amen says, “U.S. pork processing capacity will increase as much as 8-10 percent by 2019, when five processing facility construction projects are complete and fully operational.” He expects hog production to rise between two and four percent over the next two years to help meet the increasing demand. Small to mid-sized pork producers in the Midwest will likely account for the bulk of the increased production numbers. Three state of the art processing facilities are currently under construction, with two in Iowa and one in Michigan. Those facilities are expected to be able to process more than 10,000 hogs per day. Two smaller facilities in Missouri and Minnesota are currently being renovated. Amen says the traditional market response to increased capacity is price volatility in the short term, but bargaining leverage will eventually shift in favor of producers.
From the National Association of Farm Broadcasting News Service.