Oversupply, rapid sow liquidation and record feed prices could lead to losses of $60 per head for pork producers in the final quarter of 2012, according to Purdue University Extension Economist Chris Hurt.
Slaughter numbers since mid-August have been up 6 percent when only about 1 percent more hogs were expected. This has caused a $10-per-hundredweight drop in live prices since late July, with prices now in the low-$60s, said Hurt. The source of those extra hogs is probably related to some delayed marketings due to the summer heat, to a desire to sell pigs more quickly before prices drop moving into fall, and to high sow slaughter. Projected prices for the final quarter of 2012 are in the mid-$50s, but costs of production are expected to be above $75 per live hundredweight for the remainder of the year.
Losses are expected to continue into 2013, at $38 per head in the first quarter and $5 in the second quarter — total losses of around $4 billion for the U.S. industry. Hog production may return to profitability by mid-summer 2013, said Hurt, when meal prices begin to moderate, hog prices increase and the weather returns to normal.