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More hogs going to market at lighter weights; profit prospects dim
Story Date: 9/5/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 9/5/12
For the past three weeks, federally inspected hog slaughter has run more than 6 percent above year ago rates and this past week hog weights dropped without blistering summer weather as the impetus, according the CME Group’s Daily Livestock Report.
The increase in hogs to market and the decreased weights could reflect producers trying to both reduce costs and save feed for the future, the report noted.
What the data does not show so far, however, is any significant increase in sow slaughter. Recent data has shown sow slaughter even with or below last year’s levels, according to the DLR, which noted, “USDA’s weekly sow purchase data suggest that producers are biding their time.” Analysts watch sow slaughter closely for any signs that producers cutting back the scale of their operations or even getting out of the business.
Those cutbacks are not yet apparent even as hog prices are expected to decline in 2013 and analysts are predicting what Purdue University Economist Chris Hurt called “a tsunami of red ink,” for pork producers.
It is with these conditions as the backdrop that the National Pork Board will set its priorities in Des Moines, Iowa this week. Based on revenue projections from the Pork Checkoff in 2013, the board has established a budget target of $67 million, which is about 5 percent below the 2012 budget.
"The impact of the widespread drought this summer on the 2013 hog market will be on the minds of the producers working on this year's budget," said Conley Nelson, an Algona, Iowa, farmer and pork production executive who serves as president of the National Pork Board, in a statement. "We expect to see relatively good market prices for our pigs, but the drought has significantly depleted the corn and soybean crops that are the foundation of hog diets. As a result, we're going to have feed and other costs that will make it difficult for most producers to be profitable in 2013.”
The National Pork Board has responsibility for checkoff-funded research, promotion and consumer information projects and for communicating with pork producers and the public.
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