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Bright Outlook for Pork Sales

The gloom and doom of this spring’s low hog prices and high feed costs are gone, replaced by sunny times and better returns for pork producers, says Purdue University Extension marketing specialist Chris Hurt.

Meanwhile, the U.S. breeding herd continues to shrink, but pork supplies continue to rise, led by growing sow productivity and imports of live hogs from Canada. The latest Hogs & Pigs Report (June 25th) from the Agriculture Department shows the breeding herd declined by 1.5% but the number of market hogs rose by 1%.

“Since June 1998, U.S. producers have decreased the size of the breeding herd by an amazing 15%, shedding more than one million animals, to an inventory of only 5.9 million today,” says Hurt. “In fact, the breeding herd has been down in 19 of the past 24 quarters as producers have only had a few short periods of profitable returns to provide any incentives to expand.”

Accounting for the productivity growth is a record number of pigs per litter at 8.9, up about a pig from the previous four years. And Canada shipped about 2.5 million head of segregated early weaned pigs to the U.S. in the first five months of this year, an increase of 26% over the same period last year, he observes.

While hog supplies continue to be large, pork demand is what matters now. “Pork demand will likely receive added benefit from continued concerns regarding mad cow disease in the U.S. beef herd,” states Hurt. “The much larger number of cattle being screened may well result in more animals that are suspect, keeping news about the disease in the headlines and also keeping foreign governments—particularly Japan and South Korea—unwilling to move quickly on a beef trade resolution. Pork demand can be enhanced both domestically and in foreign markets.”

Hurt’s predictions for live hog prices are: low $50s this summer, mid-$40s this fall, and mid-to-higher $40s in the first half of 2005.

“Cost prospects are also dropping with declining feed costs,” he says. “Estimated costs are now in the mid-$40s this summer and are expected to drop into the low-$40s this fall. This means that the next year provides prospects of profits of an average of about $3-4/cwt.”