WPX 2011: Tough Times Ahead on Pig Markets

by 5m Editor
10 June 2011, at 5:20pm

US - The US pig industry is witnessing a period where buying grain and selling hogs on the cash markets are seeing producers lose money.

Industry economist Steve Meyer speaking at World Pork Expo said that losses of $5 a head are being seen and this could rise to $11 a head.

He said that prices are expected to be down from what was seen earlier this year but would be up to around $90 to $95 later this summer and could even reach $100, but even these rises will not be enough to see good profits.

However, he said that the issue was not the price of pigs, but the cost of production.

One of the major factors that is governing the cost of production is how much corn has been planted and what the yields will be because of the weather conditions in the planting regions.

He said that those producers who had hedged their prices earlier in the year are expected to see good profits, but those operating on the cash markets are expected to see harder times.

Dr Meyer said that the agricultural industry had gone through a period profit but the high prices for both pork and beef were likely to reduce because of the low price of chicken meat.

He said that pig meat exports up to March had risen by 19 per cent and he saw a bright future for pork exports to South Korea as shortfalls in the country due to foot and mouth disease were filled and the Free Trade Agreement between the US and Korea boosted trade.

He said that in the short term the industry in the US is going to see the lowest slaughter figures of the year and hog prices are expected to fall with some recovery forecast for the spring.

Dr Meyer said the future of the breeding herd has also been brought into question as there is no incentive to increase it and there is also no incentive to start reducing the herd through "liquidations".

He said the industry is expected to see continued consolidation as had been witnessed in the sale of Smithfield's Texas pig operations to Cargill recently.