Experts predict a good year for pork business in the US
Pig breeders in the US are facing a good year as the industry is expected to grow in 2018, according to an analysis made by Genesis.
Jim Long, President, and CEO of Genesus Inc, is expecting a current average profitability about $20 per head for 2018 as the businesses are expanding.
"We expect the US will grow the sow herd with 60,000 in 2018 (about 1% increase). We understand a new sow barn farrow to finish, 5000 sows will cost $2,400-2,500 US per sow space. Finishers 2400 head - $300-350 US per headspace. Costs keep going up. Two years ago, a sow barn wean to finish was closer $2000 US per sow space", aid the president of Genesus in a note for investors.
Packing industry is expected to narrow its margin according to Long. The packing industry has had the best gross margins ever, over the last three years but now, with the new plants now on stream, and hog numbers declining seasonally, gross margins will return to historically numbers of 92-94% US pork cut-outs. Producers will end up getting a greater share at the Cut-out compared to last three years.
"Most packers don't really want the new proposed US grade program of Prime, Choice, and Select. They mostly say they are and can do this without USDA oversights. We sense that the key will be the Pork buyers if the grading system gets implemented. If the main buyers (Walmart, Sam's Club, Hy-Vee, Kroger, Sysco, etc.) demand the grades, it will happen", predicts Jim Long, after the Minnesota Pork Congress.
(Photo source: PxHere)
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