Abundant Feed Supplies Expected to Help Offset Lower Live Hog Prices

By Bruce Cochrane

An agricultural economics professor with the University of Missouri expects an abundant feed supply to help offset the declines in live hog prices resulting from increased U.S. slaughter numbers.

North American live hog prices have faced increasing downward pressure lately.

Dr. Ron Plain, an agricultural economics professor with the University of Missouri blames increased slaughter numbers in the U.S.

Dr. Ron Plain-University of Missouri:
The annual high is probably behind us.
Normally you can think sometime around June for the peak in hog prices and a slow deterioration as we move into fall.

December is on average is about the lowest hog prices of the year and so that's the way that we're headed.

We're looking at carcass prices in the mid 70s or so, with a likelihood to decline on down towards the lower 60s by the end of the year.
As far as the factors driving it, heavy hog slaughter.

In the U.S. we were hammered real hard by the PED virus in 2014.
Slaughter was down sharply.

We've recovered from that and so that's the big reason we're up so much this year compared to a year ago, is we lost so many hogs a year ago.

We're looking at a situation where for about 10 to 11 weeks in a row now, U.S. hog slaughter has been 10 percent or more above year ago levels.

Dr. Plain says right now one of the good things is it looks like we're going to have a large U.S. corn harvest and that will help keep the cost of production down.

He says for hog producers on both sides of the border it looks like we're going to enjoy some good profits a bit longer this summer, and although some red ink this fall, a good opportunity for profits again in 2016.

Source: Farmscape