Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 7/7/09

Even as hog producers continue to reduce the breeding herd, Purdue University economist Chris Hurt expects heavier slaughter weights and larger litters will mean only a 1 percent decrease in pork production over the next 12 months.

"This small supply reduction will not boost prices back to profitability in 2009," Hurt wrote in a report, in which he also predicted pork exports could continue to lag in the fall when medical experts predict a second wave of H1N1 illnesses could occur. Even though pork consumption has nothing to do with contracting the virus, "simply having flu in the news likely means there will be some continued loss of pork export demand."

Hurt does, however, see some optimism in the fact that falling corn prices are cutting feed costs. He estimated hog producers will cut their losses to about $5 to $7 per head in the second half of 2009 from an estimated $20 per head loss in the first half of the year.

"Profitability could return as early as late-winter 2010," Hurt predicted.

Given current feed prices and expectations based on futures markets, he estimated summer production costs at about $48 per live hundredweight, dropping to $46 per hundredweight in the fall and averaging $46 to $47 per hundredweight in 2010.

He forecast live hog prices will average in the higher $40s this summer, the mid-$40s in the fourth quarter, then into the mid-to-higher $40s this winter. He expects prices to further move into the lower $50s in the spring of 2010 and into the low-to-mid $50s by next summer.

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