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 prices skyrocketing. 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 said.
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 expand.
While corn and soybean meal prices are expected to decrease in late summer and into fall as the new crop supplies become available, Hurt said hog prices also would fall, continuing the break-even trend.
"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 year.
"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," he said. "Corn prices above $6 would push the outlook back to losses.
"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.
Bob comes from a family farm background that consisted of row-crop production, and a small cow herd. After studying broadcasting in college, he started work in Extension Information and moved to commercial Farm Broadcasting. Bob also served as Head of Editorial at Data Transmission Network (DTN) where he helped develop an information service aimed at the California Dairy Industry. Today, Bob covers National Farm News, Farm Policy, and attends National Commodity Organization meetings and trade shows. Bob and his wife Ann also own a small farm. Email Bob Quinn
Graduated from Iowa State University with a degree in Journalism and Mass Communications in 1977 after serving nearly six years in the U.S. Air Force. Doug's career in commercial farm broadcasting beganduring his last two years at ISU after interning with the University owned state-wide public radio station (WOI). He created original programming at radio stations in Spencer, Fort Dodge, Iowa and Omaha, Nebraska before taking over as the Iowa State University Extension Director of Radio and Market News in 1990. Doug also produced news interviews and Internet audio reports. He retired from Iowa State in February 2010. Doug was active in ACE (then Ag Communicators in Education) during his Extension career and won several national awards for agricultural coverage. He and his wife Dianne and have a one daughter, Inger. Email Doug Cooper
Mark grew up with farming in his blood. His father and uncle farmed together during Mark's childhood and both of his grandfathers farmed. Mark studied radio broadcasting at Brown College in Mendota Heights, MN with his first job being an overnight shift on a country station. Mark has worn many hats in his broadcast career including Farm Director and Program Director. He's done sports play by play, assisted for several years in the news department, hosted a morning show and in 2006 became a full time farm broadcaster. In November 2012 Mark was recognized for his farm market reporting at the National Association of Farm Broadcasters Convention in Kansas City by placing Second nationally in the NAFB Marketcast category. Mark and his wife Melissa have a little boy, Gavin, who can't seem to get enough of his toy tractors and Little People Farm Set. Email Mark Dorenkamp
With a degree in Agricultural Production from the University of Florida, Patrick Cavanaugh farmed table grapes in Casa Grande Arizona for three years. Shifting gears in 1985, he embarked on his career in agricultural journalism as an editor in Fresno, writing feature stories for several crop specific magazines. In 1994, Patrick launched Pacific Nut Producer magazine, which covers the tree nut industry in the West, including almonds, walnuts, pistachios, hazelnuts, macadamias, and pecans. The magazine is highly respected and widely circulated. In 1996, he launched Vegetables West Magazine, which covers the vast vegetable industry in California. Since 2011, Patrick has been a daily radio broadcaster for many radio stations in California and Arizona. He has also been involved in agricultural TV broadcasting and web video reporting. Patrick began broadcasting on AgLife in Jan. 2014. Patrick and his wife Laurie Greene live in Clovis, Calif. They collaborate on California Ag Today, a daily blog. They also love going for walks with their beloved Golden Retriever. Together, they have seven children. Email Patrick Cavanaugh
Listen to the Ag Life Podcast HERE!