Oversupply, rapid sow liquidation and record feed
prices could lead to losses of $60 per head for pork producers in the final
quarter of 2012, according to Purdue University Extension Economist Chris
Hurt.
Slaughter numbers since mid-August have been up 6 percent when only about 1
percent more hogs were expected. This has caused a $10-per-hundredweight drop in
live prices since late July, with prices now in the low-$60s, said Hurt. The
source of those extra hogs is probably related to some delayed marketings due to
the summer heat, to a desire to sell pigs more quickly before prices drop moving
into fall, and to high sow slaughter. Projected prices for the final quarter of
2012 are in the mid-$50s, but costs of production are expected to be above $75
per live hundredweight for the remainder of the year.
Losses are expected to continue into 2013, at $38
per head in the first quarter and $5 in the second quarter — total losses of
around $4 billion for the U.S. industry. Hog production may return to
profitability by mid-summer 2013, said Hurt, when meal prices begin to moderate,
hog prices increase and the weather returns to normal.
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