U.S. pork producers have lost $1 billion dollars in equity over the past six months and are expected to lose another $2 billion over the next six months, according to Purdue University Extension Economist Chris Hurt.
In an analysis issued yesterday, Hurt predicted live hog prices in the mid-to-higher $50s for the final quarter of this year, improving to the low-to-mid $60s in the first quarter of 2013. Unfortunately, high feedgrain prices will push estimated costs this fall and winter to about $73 per live hundredweight, resulting in losses of about $45 per head this fall and $30 in the winter.

Over the past six months pork producers have suffered losses on average of $18 per head.
“There is little producers can do to change the overall situation for the industry since the pigs that will represent these large losses are already on-feed,” wrote Hurt. “The pigs that are here today represent producers’ plans earlier this year when they were hopeful for $5 corn prices.” Corn prices are currently running at about $7.50 per bushel.

Hope springs
By spring, hog production is expected to return to breakeven with the start of some moderation in feed costs due to lower soybean meal prices, Hurt predicted. Corn prices are expected to begin to move lower in the late summer of 2013 if more normal yield outcomes are developing for the 2013 corn crop.

Currently the outlook for the last three quarters of 2013 is indicating a small positive return of $2 per head.
He noted, however, “Overall, some additional reduction in the breeding herd is needed and is likely. “

 

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