 "Pork producers have continued a modest expansion to supply a
growing world demand for their pork products in the face of
greater financial risks and uncertainties to themselves," said
Chris Hurt.Hurt's comments came as he reviewed the pork
industry, where producers are breathing a bit easier now that
corn prices have moderated, providing growing hope for adequate
corn supplies for ethanol and for livestock.
While the breeding herd continues to grow modestly, profit
prospects over the next year appear to be near the break-even
point, averting the looming financial disaster some had feared
from high feed costs. The nation's breeding herd continues its
modest increase, with the June USDA Hogs and Pigs report
indicating that the breeding herd had expanded by almost 1
percent.
"This is the 10th quarterly report showing the breeding herd
has been growing," said Hurt. "There is no one geographic region
that is experiencing more expansion. The slow increase is in
keeping with the growth in demand for pork in the domestic and
the export markets."
Hurt noted that the number of pigs per litter continues to
set new records, as March-May farrowings averaged 9.15 pigs per
litter. Reflecting a few more sows and higher weaning rates, the
market herd number was estimated to be up by 1.8 percent.
Producers say they intend to farrow 2.5 percent more sows this
summer and then 0.4 percent more in the September-to-November
quarter.
"Some upward revisions in pig crops and larger farrowing
intentions for the summer will contribute to greater pork
production than had been anticipated," he said. "In addition,
corn prices have dropped as of this writing, which, if
continued, will result in rising weights as well.
"This all means that pork supplies will move up somewhat more
than had been forecast prior to the report. Pork production is
expected to rise by about 3 percent over the next four quarters
compared to the average of the last four quarters."
Some of this increase will be absorbed by larger exports;
however, per capita pork availability in the domestic market is
still expected to rise by nearly 2 percent in the coming 12
months.
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 Competitive meat supplies will play a role in prices of hogs and
pork. Broiler production is expected to rise by 2.5 percent and
turkey production by more than 1 percent. However, beef production
is expected to be down a bit.
"If corn prices do stay as low as they are in early July, it is
likely that production of other species will increase even more,"
Hurt said. "Production of broilers and turkeys can respond quickly
to lower feed prices. Cattle-on-feed numbers will also increase
along with higher market weights for all species."
Prices of live hogs are expected to average about $48.50 per live
hundredweight over the next 12 months, based on 51 percent to 52
percent lean carcasses. Prices for the third quarter are expected to
average in the $50 to $54 range. Last-quarter prices are expected to
drop to $43 to $47. Winter prices may improve to $45 to $49, with
second-quarter 2008 prices once again back up to $48 to $50.
"Near break-even is the outlook for farrow-to-finish returns over
the next 12 months," said Hurt. "Break-even is not so bad because it
means all costs are covered, including family labor and full
depreciation.
"Even though the hog price outlook as weakened somewhat with the
latest inventory report, lower corn price prospects have
compensated. Over the next 12 months, we are forecasting a slight
profit of about 50 cents per hundredweight. However, that will
mostly come this summer with estimated profits near $5 per
hundredweight, followed by losses this fall and winter of about $1
to $2, and near break-even next spring."
Corn and soybean meal prices could still be dynamic over the next
few weeks until the size of this summer's crops becomes clearer.
Each $1 change in corn prices affects national hog production costs
by roughly $5 per live hundredweight.
"The estimated corn break-even prices over the next year, given
current futures price estimates for soybean meal, are $1.18 per
bushels this summer, followed by $2.85 in the fourth quarter, and
$3.06 and $3.77 for the first two quarters of 2008, respectively,"
said Hurt.
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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