Negative Spring, Summer Pork Profitability Projected

by 5m Editor
14 May 2012, at 7:15am

CANADA - An agricultural economist with the University of Missouri blames a combination of milder weather which has resulted in increased pork production and softer domestic and export demand for pork for a dip in hog prices this spring which has pushed profitability back into the red, according to Bruce Cochrane.

Normally in late April and May, as temperatures rise slowing hog growth and consumer demand for pork increases due to barbecue season, we see a very fast run-up in live hog prices but that hasn't happened this year and right now prices are actually lower than they were six weeks ago which is most unusual at this time of year.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, says weather is the big driver of the seasonal change in hog prices.

Dr Ron Plain-University of Missouri

Normally hot in the summer, cold in the winter and pigs respond to temperatures.

We had a very mild winter this past winter.

Hogs grew better than average so we got heavier slaughter weights and pigs probably going to slaughter a few days early because of the rapid growth. That put more pork on the market in late winter, early spring than expected.

We have not continued to see those high temperatures thus far here in May.

Temperatures have been pretty typical for this time of year and as a result we're not seeing the run-up in temperatures that tends to slow gains down so that's part of the problem.

The other part of the problem on the weak hog prices looks like a softening in both domestic and export demand for pork.

Dr lain says, with hog prices lower than a month ago and feed costs remaining high due to the very tight supplies off of the 2011 harvest, profitability is back in the red.

He says, while feed supplies are expected to increase in the second half of the year reducing prices, for this summer it looks like feed is going to be awfully pricey.