"If everything had gone as planned, hog
producers would not be mired in the largest losses since late in
2002, when they were losing $25 per hog," said Chris Hurt. "But,
things did not go as planned.
"The September Hogs and Pigs
report from USDA indicated that slaughter supplies for October
and November would be up about 3 percent. October slaughter was
actually up a remarkable 11 percent, and November slaughter so
far has been up about 7 to 8 percent. Where have all the
hogs come from?"
From sows and gilts that were farrowing back in the spring,
Hurt answered. USDA counted sow farrowings as up by just 1
percent at that time. Pigs per litter added another 1 percent to
those supplies, but the clear message now is that there had to
be a major undercounting of sow farrowings and pig inventory
dating back to last spring.
"High slaughter runs, pushing past capacity, have forced some
Saturday kills and have depressed hog prices," said Hurt. "In
September, hog prices averaged about $47 for 51 to 52 percent
lean carcasses on a live-weight basis. Those prices have
dropped to $35 in recent weeks.
"High corn and meal prices have accelerated costs into the
very high $40s and resulted in losses of an estimated $9 per
hundredweight for average costs (in) farrow-to-finish
Unfortunately, since slaughter supplies have run sharply
above USDA numbers for two months now, one conclusion is that
supplies will continue to run higher through the rest of this
year and well into the winter, he added.
"This will keep the losses in the high single-digit range
through the winter, until the spring and summer seasonal hog
price upswing is realized," he said. "Given anticipated cash
corn prices of near $4 next summer and meal prices near $300 per
ton, costs are expected to be in the low $50s.
"It is expected that hog prices will not average above $50
for the spring and summer quarters, resulting in losses of $4 to
$8 per head."
The outlook is for continued large losses this fall and
winter, then more moderate losses for spring and summer, before
losses grow once more in the fall and winter 2008-09.
Price uncertainty for corn and soybean meal can be added to the
grave concerns for hog producers over the coming year.