Higher Hog Prices but Continued Losses Projected

US - A US-based agricultural economist projects improved hog prices in 2010 but that the losses will continue to out-pace the profits, writes Bruce Cochrane.
calendar icon 7 January 2010
clock icon 3 minute read

Despite reduced hog production weak demand due to the recession resulted in estimated losses in the US in 2009 of 25 dollars per hog marketed while the exchange made things even more difficult for Canadian producers.

University of Missouri agricultural economics professor, Dr Ron Plain, expects lower feed costs and reduced hog production to improve hog prices by 10 to 15 per cent in the US in 2010.

Dr Ron Plain - University of Missouri:

We'll probably have a number of weeks or maybe months in the summer of profit but for the entire year of 2010 at this point it looks like the red ink will outweigh the black ink.

The normal seasonal pattern would have prices moving higher.

June is the odds on favorite for the high price month most years and hopefully we'll be able to follow that pattern.

We did pretty well in December of 2009. That turned out to be the highest price month of the year for hogs here in the states. It wasn't high enough to cover cost of production but it was definitely a move in the right direction.

One of the other key things is how long we continue to reduce the sow herd both US and Canada. The quarterly inventory reports are showing fewer sows than a year ago.

We need to continue to do that probably all the way through 2010 if we're going to be able to enjoy some good profits in 2011.

One of the other things is on the demand side, hopefully, we'll see more economic activity and consumer confidence returning.

If so that will be good not only for hog prices but for all meat prices.

Dr Plain estimates US hog producers have lost about six billion dollars in equity during the past two and a quarter years of red ink. He says it has been a tough stretch but hopefully, we are coming to the end of it.

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