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At the World Pork Expo, farmers are in hog heaven

Some 2,300 pigs and 20,000 pork farmers, packers and agricultural suppliers are convening in Des Moines, Iowa this week to talk shop at a time when hog prices are climbing.

They're a ways away from two years ago, when a devastating gastrointestinal virus wiped out millions of American pigs, a supply shock that shot prices to all-time highs of more than $1.33 a pound. But with that epidemic largely behind them and prices associated with lean hogs — the freshly-slaughtered pigs upon which the benchmark pork commodity prices are based — hovering above 80 cents per pound, producers are nonetheless pleased.

Hog wild, year-to-date

John Weber, a longtime hog producer who is now president of the National Pork Producers Council, an industry trade group, calls this a "rebuilding" phase.

"We're pretty much back at full production," he said. "Consumer demand has been terrific; it's held in there really well. Exports have done well. We have been able to compete against the competitive proteins."

No doubt he's referring to alternatives like chicken and beef, with which pork competes for a favored position in the American diet, sometimes with mixed results.

McDonald's, for instance, introduced an all-day breakfast menu last October, boosting demand for some of the fattier pork cuts that go in to bacon and sausage. But just a couple of weeks later, the World Health Organization warned that the consumption of pork and processed meat increased the risk of cancer, chilling that buzz significantly.

Over 20,000 attendees will gather at the Work Pork Expo over the next two days. 40 different countries have registered"
Amanda Lasky | CNBC
Over 20,000 attendees will gather at the Work Pork Expo over the next two days. 40 different countries have registered"

Lean-hog market analysts say producers have China to thank for prices surging about 45 percent so far this year, besting nearly every other commodity futures contract other than soybeans.

"Demand is red-hot in China," said Brett Stuart, president of Global AgriTrends a Denver-based agricultural market research firm. "They are currently scouring the globe trying to find pork to fill that demand."

Overall, he said, the U.S. exports some 22 percent of its pork, and if additional producers here can avoid using a popular muscle drug called ractopamine that China bans from imports, that amount could grow:

"When you see Chinese hog prices literally double the price of U.S. hogs, the market starts to get a little excited," he said.

Stuart and other market watchers noted that seasonal factors are helping pork producers, too.

The onset of barbecue season, as well as what hog-industry participants call "BLT season" — the summer period where pork production is at a zenith and tomatoes ripen in the Midwest and Northeast, making the crispy sandwich a popular menu item — may help lift prices to the 90 cent-per-pound range between now and Labor Day, analysts and traders said.

At the World Pork Expo in Des Moines on Tuesday, where thousands of producers, equipment and food sellers, and analysts were expected to gather, vendors were pitching new medicines, decontaminating agents for farms and other products. In the main exhibition hall, prized pigs walked the ring with their owners while others milled around or dozed in stalls.

It was at least the 28th annual gathering of its kind, and the 12th for Jeff Bozarth, who sells food ingredients to pork producers from Springfield, Missouri.

"I think everybody's pretty optimistic," he said, tucking in to some grilled pork at a picnic table. Most producers, he added, "are not going to get rich. [But] they're fine."