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Analysts expecting year-on-year growth to moderateAnalysts expecting year-on-year growth to moderate

Steve Meyer

December 21, 2015

4 Min Read
Analysts expecting year-on-year growth to moderate

The USDA’s quarterly Hogs and Pigs report will be released Wednesday at 2 p.m. Central. The report will be carefully analyzed to get an idea regarding 2016 hog supplies. Figure 1 contains the results of Urner Barry’s pre-report survey of analysts regarding what they expect to be in this week’s report. Meyer_20figure_201_6.jpgThese numbers are important because they indicate what is likely already “in the market” so any difference between actual report figures and these will be expected to move futures one way or another.

It is clear that analysts continue to expect year-on-year growth to moderate, but the bad news is they do not expect any year-on-year reductions either! With five of the past six non-holiday weeks seeing record U.S. pork production, that is sort of a chilling thought in and of itself.

I find the average estimates to be pretty reasonable. The 180-plus category is likely too small given that slaughter has been 7.7, 6.4 and 7.3% higher the first three weeks of December. The next two are likely to be a bit smaller than last year due to Friday holidays, and some plants being closed on both Friday and Saturday.

Those impending closures explain some of the recent slaughter numbers as well and I’m sure they – and the fact that at least one plant operated on Dec. 13 – were a factor in last week’s slaughter estimate of 2.493 million head, the second highest ever. That total is the largest since 2.477 million head were harvested the week of Dec. 22, 2007, when the industry was handling a lot of pigs that would previously been lost to circovirus and related diseases.

But the average of analysts’ expectations for lighter-weight inventories, the September-to-November pig crop and farrowing intentions all point to 2016 hog numbers very similar to those of 2015. That theme has not changed yet, and we’ll see if it survives Wednesday’s report.

Congress delivers good news

The best news of last week was the U.S. Congress’ passage of an omnibus spending bill that included language to repeal the mandatory country-of-origin labeling law that was about to earn us some well-deserved retaliatory tariffs from Canada and Mexico. I have heard nothing out of Mexico on the subject but Canada’s new Minister of Food and Agriculture stated that if the law indeed repeals that provision, Canada would not go through with imposing the tariffs. I suppose he, like many others, has yet to actually find the language among the thousands of pages of this boondoggle of a bill but I understand that the words are indeed there. “We told you so!” is not a strong enough admonishment for the people who have promoted this trade barrier program as something to fulfill consumers’ right to know.

I have no problem with consumers wanting to know, and will even concede that they have a right to know – as long as they are willing to pay the full cost of generating the information and that generating that information does not violate other promises we as a country have made to other countries. MCOOL failed on both counts from the outset.

Someone asked me last week “Why are they just repealing it on meat?” Good question, but I think the answer lies in the fact that fresh fruits and vegetables and nuts and the like are pretty easy to track (the box with “Peru” or “Chile” comes in and the grapes or asparagus is just placed on the shelf) where livestock and meat are very difficult to track, especially if an animal changes owners more than once. I’m looking forward to going to Canada and not having to apologize for a change.

News besides the markets

Other items of news last week had little if anything to do with markets. Both were downers of the greatest sort.

First, of course, was news that Chris Hodges would be leaving the National Pork Board after less than one year at the helm. I don’t have much idea of what happened, but I am, like many, shocked that whatever it was could have left Chris and the Board at such odds that one or both would conclude it either could not be fixed or was not worth the effort to fix. It’s just disappointing. Let’s hope the next effort is more rewarding for both sides.

Second, my sympathies and prayers go out for the family and friends of Mark Engle, a consummate professional in our industry, who passed unexpectedly early last week. Mark was one of the best people I have met in this business. I knew him to be intelligent, knowledgeable, pleasant and friendly. He was a person I just liked being around! He was accomplished as both a veterinarian and a businessperson, and had seen the industry from about every conceivable direction. He made a difference in virtually all of those roles. I will miss him.

Jim McKean, Scott Hurd and now Mark Engle – it’s been a tough couple of years for our valued leaders in the veterinary medicine/policy fields. So let’s pray, too, for that next generation of leaders who will have to step to the plate, perhaps before they had expected. I hope it is not before they are ready. Farewell, friend.


About the Author(s)

Steve Meyer

Partners for Production Agriculture

Steve Meyer joins Kerns and Associates, Ames, Iowa. As Kerns team member, Meyer will be speaking, developing and delivering economic data and analyses, and working with our clients to provide critical perspectives as they benchmark and drive risk management decisions.

Previously, Meyer served as vice president of Pork Analysis for EMI. Meyer conducted ongoing analysis of hog and pork markets. In a former role, as president of Paragon, he also monitored and analyzed cattle, beef and poultry markets to meet the needs of his diverse set of clients. He served for 12 years as an author of The Daily Livestock Report sponsored by CME Group, an e-newsletter whose circulation grew steadily following its introduction in 2003. In addition, he writes a feature article for National Hog Farmer’s NHF Daily e-letter that focuses on economic issues in North America’s swine/pork sector.

Prior to founding Paragon Economics, Meyer served as director of Economics for the National Pork Producers Council and National Pork Board from 1993-2002. In that capacity, he provided economic counsel to producers and NPPC/NPB staff and coordinated staff and consultants’ activities regarding meat industry production and price forecasts and the economic impact of pork production and processing. He also administered NPPC/NPB programs dealing with marketing and pricing systems, industry structure, coordination and competitiveness. Since leaving the NPB staff, Meyer has served as the organizations’ consulting economist. In addition, he spent three years as an assistant professor in the agriculture economics department at the University of Missouri.

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