Ag economist expects hog prices to be lower this year

Pork consumers will be happy at the grocery store, but that means pork producers will see less profit per head.

Purdue University Agricultural Economist Chris Hurt says consumers can expect to pay less for their bacon this year with pork prices forecast to be down 23 cents per pound.

Hurt notes that hog prices last year reached record highs, with the national live prices reaching $100 per live hundredweight – $ $4.22 per pound – because consumers feared that great shortages would result from the deadly porcine epidemic diarrhea virus. The actual drop in production, however, was only 2%.

“The market adage ‘buy the rumor and sell the fact’ has played out once again,” Hurt says. “The inability to refute the rumors of massive death losses a year ago contributed to prices overshooting to the upside.”

The amount of pork produced in February was expected to be up by 3%, but ended up at 7%. Hurt says the USDA’s inventory count in its December estimate appears to have undercounted young pig numbers. As of January, pork was at $3.99 per pound. By the end of this year, it is estimated that pork supplies will be up an average of 6% to 7%.

The increase in pork supply mirrors other meats such as beef and chicken. Hurt says prices might be down in meat industries this quarter because of the weak world economy and the slowdowns in the West Coast ports, which account for nearly half of all pork exports. Exports are expected to stabilize in coming weeks.

Hurt also says costs of pork production are expected to be down this year, especially in soybeans. Despite that, modest profit losses are anticipated in the first and fourth quarters of the year, resulting in an average year profit of about $8 per head, compared with last year’s average profit of $53.

Hurt advises pork producers to wait on expanding their farms until more information can be gathered this year.

For more information on the economic outlook for hog production, see Hurt’s article on the subject.

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