Two years after Porcine Epidemic Diarrhea virus (PEDv) killed nearly 10 percent of U.S. hogs, farmers who built up herds to compensate are faced with a sober realization: they've produced too much bacon.
The aggressive ramp-up in hog production after the PEDv outbreak in 2013, which brought record profits for those whose pigs survived, has now created the greatest U.S. hog price collapse since the late 1990s. That was when overproduction sent prices plunging 75 percent to 50-year lows.
Benchmark lean hog futures prices on the Chicago Board of Trade have dropped 42 percent from their July 2014 record high of $133 per hundredweight (cwt).
And as herds continue to grow, and the strong dollar and competition from Europe and Canada blunts export demand, hog farmers are probably facing even lower prices in the months ahead, with December-delivery futures trading about 20 percent below current prices. The hog glut spells more trouble for a U.S. farm economy already struggling with the lowest grain prices in five years.
La Mars, Iowa-based Tentinger Farms, which sells hogs to Tyson Foods, expanded its herd by about 20 percent to cash in on high hog prices and cheap feed costs, but record returns have eroded.
"Things are not real rosy out here. We're spending a lot of money and touching a lot of bases, handling and feeding more pigs, and not really making any money," owner Bill Tentinger said.
"Once we get past 2016, I think things are going to perk up a little bit ... but it's not going to be gangbusters rolling ahead," he added.
With retail prices now at three-year lows, pork is stealing market share from other proteins: U.S. pork sales in June were up 12.5 percent over the previous month, while chicken rose 3 percent and beef fell 2.2 percent, according to the most recent industry data.
The number of piglets per litter hit a record high of around 10 in the spring, according to the U.S. Department of Agriculture (USDA), helped by steadily improving use of genetics and selective breeding. These animals take around six months to make their way to the meat case.
And when cooler autumn weather arrives and sweet, freshly harvested corn begins filling feed troughs, reviving pig appetites, weights should climb back up to pre-summer levels.
More pigs coming
The boom started when farmers who had lost millions of pigs to PEDv took advantage of cheap feed to plump up their hogs. Meat processors such as Cargill Inc and Smithfield Foods Inc were paying premiums for the extra weight.
As vaccines and strict bio-security measures brought the virus under control, hog numbers exploded.
Some hog producers are still expanding as they reinvest last year's record profits. Construction permit applications for new and expanded swine buildings in Iowa, the top producing state where hogs outnumber people more than six to one, had nearly reached the 2014 total by mid-2015, according to state data.
Tyson Foods CEO Donnie Smith said in a recent conference call with analysts that he expects the domestic expansion to continue into 2016 resulting in 3 to 4 percent more hogs and pork on the domestic market.
Managing such boom-bust cycles has long been a challenge for the farming economy, where unpredictable weather, a shift in consumer diets or cooling export markets can mean the difference between fortune and failure.
In the late 1990s, farmers were being paid such low prices for their hogs that they lost money on each animal sold. Many small hog farmers went out of business.
This time around, the stuffed supply chain has prompted some U.S. grocers and fast food franchises to promote pork.
Midwest supermarket operator Roundy's has offers including 38 percent off pork tenderloin at Mariano's stores and a third off packages of bacon at its Pick 'n Save locations.
"Roundy's has been taking advantage of deals on pork and we have been promoting it more in the past few months, and it will continue," its spokesman James Hyland said.
Retail advertisements featuring pork offers from grocery stores jumped 16 percent in June over a year ago, the National Pork Board says. Billboards in U.S. cities splash Burger King's "Extra Long Pulled Pork" sandwich and Wendy's Baconator fries.
Weathering the downturn
But in the country that claims to have invented the ground beef hamburger and produced McDonald's, pork demand will remain largely tied to price, experts say.
"It's hard to say if pork can retain that market share. It's very much price driven in all three commodities - pork, beef and chicken," said William Slabaugh, research analyst at Stephens Inc, an independent financial services company.
An expanding cattle herd is expected to bring down beef prices, but whether prices fall enough to recapture lost market share may hinge on hard-to-forecast elements such as grazing pasture conditions and grain costs.
There is some impact from health concerns or diet fads that has seen beef in particular losing out to chicken - but a lot of that may have already played out.
Annual beef consumption has steadily fallen to around 54-55 pounds per capita now from 67.5 pounds in 2000 while chicken consumption climbed 18 percent to 91.4 pounds per person, according to USDA data.
In contrast, people have been eating around 50 pounds of pork per year throughout the period.
"People started eating more chicken as of 15 years ago... But in general, the trends don't change a ton. It's more what gets pushed is what's cheaper," Slabaugh said.
For now at least, low prices are likely to boost demand for bacon, pork and sausages into the autumn.
"Anybody that wants to cook pork at home is going to have a great summer," said Will Sawyer, an analyst with Rabobank.