U.S. hog farmers have slaughtered 73.3 million hogs in the first eight months of 2012 (the most in three years) to help control costs in the wake of increased feed prices, leading to predictions of lowered pork supplies and increased prices in 2013, according to the U.S. Department of Agriculture.
Per-capita pork supplies are expected to drop to 45.2 pounds in 2013, the lowest since 1975, according to the USDA. Crop damage caused by the U.S. drought has led to record-high corn prices, and pig farmers expect to lose roughly $44 per head in the fourth quarter of 2012, the most since 1998. Many farmers are processing their herds early to avoid heavier losses later. Producers may receive about $56 per hundredweight for hogs in the fourth quarter, and the cost of production is estimated at about $72.29 per hundredweight, said Chris Hurt, an agricultural economist at Purdue University. That means farmers may earn $151.20 for a 270-pound hog that costs $195.18 to produce.
Lean-hog futures for July 2013 delivery are trading at 97.3 cents per pound compared with 74.65 cents for December 2012, a sign traders are already anticipating fewer supplies in 2013, say analysts.