Grain Production Expected to Influence Pork Industry Profitability14 February 2013
CANADA - An agricultural economist with the University of Missouri says the impact of weather on this year's grain crop will determine whether or not pork producers will be profitable in 2013, writes Bruce Cochrane.
US hog prices in 2012 were the second highest on record but feed prices were the most expensive ever due to the US drought resulting in average losses of 12 dollars per hog slaughtered.
Dr Ron Plain, an agricultural economics professor with the University of Missouri, says most hog producers are counting on better crop production this summer and a drop in corn and soybean meal prices.
Dr Ron Plain-University of Missouri
Normally hog prices will end the first quarter of the year a bit higher than they start the year at so we're expecting a little bit of improvement in hog prices.
Normally the big run up during the year comes in the second quarter of the year.
The key thing though from bottom line profit is what's going to happen to feed costs and unfortunately not likely to get better quickly.
We really need more grain on the market and that will come with the summer growing season.
If the weather is shaping up to make it look like we're going to have good production this year then we'll probably see feed costs start to decline in the second quarter.
I've been reluctant to tell producers to forward price hogs.
In general I'm a little more bullish than the futures market's been lately.
And I've been generally recommending producers buy feed sort of on a hand to mouth type situation.
The expectation is that at some point later on in the spring we'll see a sharp drop.
Normal weather and we could well take a dollar and a half to two dollars a bushel off of corn prices so it's probably not wise to lock in feed very far ahead.
Dr Plain says hog prices are expected to be higher this year than last.
He notes total meat supplies are down in response to the high feed costs so we're looking for higher prices for pork, beef and poultry.
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