Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 5/26/10

The stock market isn't the only place where concern about European debt is playing out. Implications for the world economic recovery and consumer demand might also hit the hog market, just as industry financials are moving from red to black.

That and related dollar strengthening have dimmed prospects for meat exports, according to Purdue University Extension Economist Chris Hurt.

"Last year demonstrated just how critical a recessionary economy was in weakening pork demand, Hurt wrote in a report. "A more cautious world now likely means some moderation in pork prices from recent lofty levels, but prices are not going to fold either."

Another concern is the inevitability of rising retail prices, as grocers can no longer absorb into their margins higher wholesale prices due to reduced pork supplies. "You can bet that retail prices will soar in coming months," he warned, predicting average retail pork prices will be close to $3.10 per pound this summer compared to $2.92 in April.

Hurt predicted live hog prices will average near $60 per live hundredweight in the second quarter, then drop into the $56 to $60 range in the third quarter, with fourth-quarter prices averaging near $50, for a 2010 price average of $54.

Due in part to moderating feedgrain prices, Hurt put profits at $21 per head in 2010 and $10 per head in 2011. These profits, he said, are needed "just to dig out from under the losses of the past two years."

Profits notwithstanding, he does not expect much herd expansion. "While profitability will be strong in 2010, many producers, and their bankers, want to see balance sheets improve before giving the OK for any expansion."

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