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Sunday, 12 November 2017 16:01

Pork prices dip as tensions rise with NAFTA

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A group gathers for the opening of the new $255 million Clemens Food Group plant in Coldwater, Mich., about 40 miles from Battle Creek. A group gathers for the opening of the new $255 million Clemens Food Group plant in Coldwater, Mich., about 40 miles from Battle Creek. Courtesy Photo

Concerns over the fate of NAFTA come at a time of pricing pressures for Michigan’s hog farmers. 

An October report in the Wall Street Journal cited new slaughterhouse capacity coming online in the Midwest — including at the new $255 million Clemens Food Group plant in Coldwater, Mich. — with projected record pork production for the year. However, given a slowdown in ham and pork chop sales in recent months, many experts speculated the production would be more than consumers could eat. 

That sent the market reeling in September, when prices had fallen nearly 38 percent compared to July. According to a report from the U.S. Department of Agriculture (USDA), 2.16 billion pounds of pork were produced in September, up 2 percent from the previous year in the United States. 

However, in the time since that dip, “prices have started to work their way up (in October), somewhat significantly to a breakeven price,” said Harley Sietsema of Allendale-based Sietsema Farms. 

According to an Oct. 30 report in National Hog Farmer, strong demand from domestic consumers and exports calmed those market worries, as hog futures for December rose from the late summer lows. In part, the report cited the efficiency of new hog processing plants for the improved outlook. 

“It has been over 20 years since we have had a large pork processor in the state, so the opening of the Coldwater plant is a real help,” Mary Kelpinski, CEO for the Lansing-based Michigan Pork Producers Association, said in an email to MiBiz. “The (Clemens) plant is not only an asset to the pork industry, but also to all of agriculture in the state. Hogs use about 10 percent of the corn and soybeans that are raised in Michigan. With the addition of the plant, more pigs will be staying in the state and utilizing that feed.”

Kelpinski added that Mexico has been purchasing “a lot of hams recently and that has driven the price up and amount in cold storage down until recently.”

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