Analysts Forecast Looming Crisis

by 5m Editor
10 April 2008, at 8:33am

US - Crisis looms for US pig producers later this year due to falling prices, increasing pork supplies, and the rising cost of corn-based feed.

Chicago University press Medhill Reports, says that industry-wide losses may total $3.5 billion in 2008, or about 25 percent of the total value of production, according to agricultural economists.

Despite a recent rebound, hog prices averaged only $39.50 on a live weight basis in the first quarter of 2008 and prices may average $45 for all of 2008 compared with $47.09 in 2007, which was the lowest level since 2003, according to an economic outlook published jointly by the Department of Agriculture Economics, Purdue University, and University of Illinois at Champagne-Urbana.

Record high production costs, including the cost of corn feed, have pressured hog farmers, forcing some to sell off, or liquidate their herds, thereby increasing pork supplies and pushing prices lower.

From the February 4 high of $81.05, the most-active June lean hogs contract at the Chicago Mercantile Exchange fell 18 percent to $66.60 on April 4. Prices have rebounded 6 percent since then, closing Wednesday at $70.70.

Analysts observed that the recent rebound in hog prices was due to increased protein exportation to countries like China and Russia, but warn this trend may not be sustainable throughout 2008.

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5m Editor