by Ken Root
Listen Here: Money Matters 1-5-17
Hog Farmers across the country are setting record on the number of pigs weaned per litter. The result is an uptrend in production without an increase in the breeding herd. In the year ahead, however, the price for pork is expected to rise slightly.
The last USDA Hogs and Pigs report issued in December estimated this year’s supply of pork will be larger than most analysts expect.
U.S. pork producers, in the last quarter of 2016 set a pigs per litter record,10.63. For the whole of the year, the new annual record is 10.5 pigs per litter. Every sow is having more pigs.
Given these numbers, the industry will increase pork output by about three percent this year says Purdue University Extension Agricultural Economist Chris Hurt. “Pork production will rise by 4% in the first half of 2017, and by about 2% in the last half.
What does this mean for the price of hogs? With three percent, higher production one might expect annual prices to be lower, however there are additional items to consider says Hurt.
“First retail price did drop in 2016, but there is an opportunity for retail prices to come down even more. Lower retail prices will help stimulate the quantity of pork consumers purchase. Secondly, USDA expects exports to expand by 5%. Finally, the farm to wholesale margins are expected to drop.”
Live hog prices are expected to be about $48 in 2017, $2 higher than in 2016. Chris Hurt predicts prices will average $45 in the first quarter, the very-low $50s in the second and the third quarters, and then drop to $43 in the final quarter of 2017. A range of $2 higher or lower would be reasonable for price projections.
He expects costs of production are expected to be around $50 on a live weight basis in both 2016 and 2017 based on current feed price expectations.
Because the 2017 outlook is for weak returns the Purdue number cruncher says it is important hog farmers keep further expansion to a minimum. This will be difficult with new processing capacity coming in 2017 as those plants will want to stimulate some added production to fill their lines.
