Return to Profitable Hog Prices Expected by April

by 5m Editor
19 January 2011, at 11:55pm

CANADA - Ron Plain, agricultural economics professor with the University of Missouri, expects a return to profitability within the North American swine industry by April and strong profits through the summer, writes Bruce Cochrane.

The Global Price and Production Forecast is among the topics being discussed today as part of the 40th annual Banff Pork Seminar which kicked off last night.

University of Missouri agricultural economics professor, Dr Ron Plain, says losses around the world resulting from declining supplies of feed grains and high feed costs have limited growth so, if the economic improvement seen in 2010 continues, we will see stronger demand for pork and given the tight supplies we may have higher prices in 2011 in spite of the higher production costs.

Dr Ron Plain – University of Missouri

We're probably going to get close to 60 cents a pound cost of production and with the US dollar and Canadian dollar pretty close to par it doesn't really make a whole lot of difference which currency you use to calculate that but we anticipate the cost of production here in 2011 will be the highest ever because of high feed costs.

On the price side of things, unfortunately we're not quite at a level yet that'll turn a profit but our expectation is that hog prices will improve as we move on toward spring, probably be back in a profitable situation for the average producer by April and we're looking at very strong profits right now through the summer.

The futures market is predicting record prices for the summer, somewhere up close to 70 cents a pound on a live weight basis and that should give us a good margin.

Then seasonally, once we get past August, the expectation is prices are probably going to decline and probably see on a live weight basis hogs back somewhere in the 50s per pound on a live weight basis.

Dr Plain recommends producers keep an eye on feed costs and look at the futures market and consider forward pricing some of their hogs to lock down some of the risk they are facing.