WEST LAFAYETTE, Ind. — Although hog production has returned
to break-even levels, Purdue Extension agricultural economist Chris Hurt advises
producers to forego expansion for now because of delayed planting and
uncertainty about this fall’s corn harvest.
Pork producers were among some of the hardest hit
financially when the drought of 2012 decimated grain supplies and sent feed
But hog prices have rallied this spring, from the mid-$50s
per hundredweight in March to the low-$70s, and feed prices have fallen somewhat
on the heels of the U.S. Department of Agriculture’s March Grain Stocks report
that showed more grain than expected.
Even so, late spring planting has brought on some worries
about hog production costs, Hurt said.
“Delayed planting has most recently sent corn and meal
prices trending upward, raising concerns that hog production costs will not drop
as much as some had anticipated,” he said.
Current production costs are about $67 per live
hundredweight. Hog prices for the third quarter are expected to remain about the
same, leaving producers at break-even levels for the foreseeable future, Hurt
Break-even means that all of a producer’s costs are covered,
including depreciation and family labor. According to Hurt, most producers could
continue their operations under break-even conditions, but they aren’t likely to
While corn and soybean meal prices are expected to decrease
in late summer and into fall as the new crop supplies become available, the
economist said hog prices also would fall, continuing the break-even
“Current forecasts are that fourth-quarter corn prices will
be $1.25 lower per bushel than third-quarter prices and soybean meal prices will
be $40 lower per ton,” he said. “That means costs will drop from about $67 per
live hundredweight this summer closer to $60 for the final quarter of the
“Hog prices are expected to be near the $60 level for the
final quarter of 2013 and 2014, thus continuing break-even conditions.”
Hurt advised producers to keep expansion plans on hold until
they see how this year’s crop sizes and prices pan out and how they will affect
hog production costs. More information about the crop will become available over
the next 60 days, as the growing season progresses.
“In general, if corn prices stay below $6 per bushel, the
pork industry will be able to survive another year of low crop production,” the
economist said. “Corn prices above $6 would push the outlook back to
“The opposite would be true of $5 or lower corn prices. Some
expansion could be expected with low $5 corn prices, and a more aggressive
expansion would be expected with corn prices dropping below $5.”
With that in mind, Hurt said expansion of the U.S. pork herd
isn’t likely until at least the fall. Any expansion at that time would begin
with gilt retention and wouldn’t increase pork supplies until late summer and
fall of 2014.