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World Pork Expo June 5, 2003 Report 01
(Episode 1257)

An Agricultural Economist with the University of Missouri predicts a smaller US breeding herd will translate into higher live hog prices for the rest of 2003.

In recent weeks the US slaughter has been running about two percent below year earlier levels which has resulted in a dramatic increase in price.

Professor Emeritus Glen Grimes blames the dismal prices from late 2001 into the second quarter of 2003 on the fact that increased productivity has outstripped increased demand.

"Our demand growth is about one and a half percent per year. Our productivity growth, with the exception of the most recent year, has averaged above three percent for a four year period.

You have an industry that the structure is such that it's hard to reduce the breeding herd. You have a productivity growth of three percent and a demand growth of one and a half percent and those come together to give us a supply that's larger than we can sell at a price that producers can make a profit with.

The over supply did eventually get us enough reduction in the sow herd. On March 1'st we were down four percent in the US as far as the sow herd is concerned.

Your sow herd was still up but it shows the smallest growth in quite some time so, at least, there is some slowing in the total North American breeding herd".

Grimes says US prices have reached the point where they are above break even for even the fairly high cost producers.

He says we're looking at a further four percent reduction in hog supplies in the third quarter.

He says, if that happens and demand stays strong, third quarter prices could exceed those of the second quarter on average.

At World Pork Expo, I'm Bruce Cochrane.