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"USDA is currently expecting beef
production to drop by 5.5 percent, with chicken production up only
1.4 percent and turkey unchanged," said Chris Hurt. "Added to the
decline in pork production, total meat and poultry supplies are
anticipated to drop by 1.6 percent.
"A decline in total U.S. production of
meat and poultry is rare. The last time this occurred was in 1982. A
drop of 1.6 percent in total meat and poultry production means about
a 2.5 percent drop in per capita supplies."
Hurt's comments came as he discussed
the outlook for hog prices in 2003.
"The new year brings renewed hope for a
return to profitability for hog producers," he said. "Last year was
another tough one, as hog slaughter reached 100.3 million, the
second highest annual count after the 101.6 million of 1999. Pork
production set a record at 19.7 billion pounds, surpassing 19.3
billion pounds in 1999."
Hog prices were depressed in 2002. The
annual average price for 51 percent to 52 percent lean hogs on a
live weight basis was $34.90 per hundredweight, $11 lower than in
2001. Another discouraging factor was an increase in estimated
production costs by about $1.50 per live hundredweight, to an
estimated $38.60. Losses for average costs for farrow-to-finish
producers taking spot prices were estimated at $3.70 per
hundredweight. The largest estimated
losses occurred in the last two quarters, with averages of $6.10 and
$8.20 per hundredweight, respectively.
"For 2003, price and profit prospects
brighten considerably because of both supply and demand factors,"
said Hurt. "Slaughter is expected to drop to 97.9 million, a 2.4
percent reduction. Pork production is projected to be at 19.4
billion pounds, a 1.6 percent reduction."
The decline in pork production is a
result of a declining breeding herd as the industry experienced
financial losses starting last spring, Hurt noted.
"In the last half of 2002, sow
slaughter averaged about 12 percent greater than during the same
period one year earlier," he said. "As a result, USDA reported that
the breeding herd had dropped 3.2 percent by Dec. 1. The total
number of animals in the herd stood at only six million, the lowest
number since USDA began tracking the breeding herd in 1963.
Farrowings in the fall of 2002 were down by 2.5 percent, and the
number of pigs per litter was constant at 8.83 pigs per litter.
Intentions are down 1 percent for the winter quarter and down 3
percent for the spring quarter."
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this article]
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Prices for 51 percent to 52 percent
lean hogs on a live basis are expected to increase to near $40 for
the year. Price recovery in January and February into the mid-$30s
may be a bit slower than anticipated prior to the report. However,
Hurt noted, much of the price recovery for the year could come in
from March to June, perhaps reaching the mid-$40s by June.
Third-quarter prices are expected to
average near $40, with prices in the fall of 2003 falling back into
the mid- to higher $30s.
Hurt addressed the question of when the
highest prices on the next cycle might occur.
"The most recent loss period stretched
from the second quarter of 2002 through the first quarter of 2003,"
he said. "Generally, it takes about four to six quarters after the
loss period to reduce farrowings and six to eight quarters to
increase prices. These cycle guidelines would result in the highest
prices on the cycle in late 2003 and the first half of
2004. If so, once the industry turns
back to profits in the spring of 2003, we can expect a favorable
return period through the summer of 2004."
Given the tight carry-over situation
for both corn and soybeans, some ownership protection, especially on
corn, seems worthy of consideration at this time, Hurt said. Soybean
meal prices will be sensitive to weather in South America through
the winter, and corn prices will be sensitive to the pace of exports
and weather in the United States through next summer.
"A return to the depressed corn prices
of the 1998 to 2001 crops is not expected," he said. "At this point,
an average U.S. market price of about $2.25 per bushel is expected
for the 2003 crop rather than the sub-$2 of the abundant crop years.
This means that hog production costs, while dropping, will not
achieve the low levels experienced from 1998 to 2001."
Hurt noted that in the past he has
argued that producers should be cautious about using futures to
hedge when price prospects are improving as they are now.
"This is
because the ultimate cash market prices have tended to be higher
than anticipated by futures," he said. "Following this logic,
hedging with options tends to be preferred. Of course, everyone
wonders just how much faith to put in historical facts in the 'new'
hog industry, and thus each individual will have to evaluate the
opportunities to 'lock-in' profitable hog prices using futures or
options over the next 14 months."
[U
of I news release]
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"The dairy business
continues to face challenging times," said Michael Hutjens,
University of Illinois Extension diary specialist who organizes the
annual event. "This one-day meeting will help producers make the
most of their resources and remain a productive part of the dairy
industry."
In addition to U of I
Extension, the program is sponsored by the Department of Animal
Sciences, the College of Veterinary Medicine and the Illinois
Department of Public Health's Alternative Drug Residue Penalty Fund.
With the exception of
the Jerseyville site, each program begins at 9:45 a.m. and ends
about 3 p.m. The Jerseyville program begins at 7:30 p.m.
Presenters include
Hutjens; Darrel Kesler, U of I Extension reproduction specialist;
Dave Fischer, U of I Extension dairy educator; and Geoff Dahl, U of
I Extension dairy specialist. Commercial displays will also be
available for viewing.
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article]
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People interested in
registering or obtaining more information should contact their
local Extension office.
Dates and locations
are:
Jan. 8 -- Effingham,
Knights of Columbus Hall
Jan. 9 -- El Paso,
Elms Restaurant
Jan. 10 -- Arthur,
Yoder's Country Kitchen
Jan 14 -- Quincy,
Adams County Farm Bureau Building
Jan. 14 --
Jerseyville, Super 8 Motel (7:30 p.m.)
Jan. 15 -- Okawville,
Community Club Building
Jan. 16 -- Breese,
American Legion
Jan. 21 -- Freeport,
Highland Community College
Jan. 22 -- Elizabeth,
Community Center
Jan. 23 -- Harvard, Stratford Inn
[U
of I news
release]
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In old business, the group talked about
raffle ticket sales at Thanksgiving basketball tournaments and at
the Stroll Into Christmas event in Minier. At the Christmas event
the door prize of a yard ornament went to Pat Peifer of Minier.
In new business the group discussed
plans for the FFA Alumni Chapter’s banquet on Jan. 11 in the Olympia
Middle School cafeteria at Stanford.
The banquet will consist of a social
time, followed by a pork chop dinner with the trimmings, along with
a program, a silent auction and the drawing of prize winners for
raffle ticket items -- a 36" color TV, a chain saw and a maple tree.
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The officers
for the chapter are Todd Wibben of Atlanta, president; Jeff Springer
of Minier, vice president; David Deal of Danvers, secretary; Jeff
Schnieder of Armington, treasurer; Kyle Haning of Delavan, reporter;
and Melvin Springer of Armington, member at large. The vo-ag
advisers are Chris Embry Mohr and Heather Obert.
[News release] |
