Hog farmers are expanding their herds following the record-high market prices of 2014. Production is forecast to rise by 7 percent this year, a surge that is driving down hog prices. Economist Chris Hurt of Purdue says the average cost of production is $51 per 100 pounds of hog, while hog prices are expected to average $53 per 100 pounds this year, leaving a thin profit of $2 per 100 pounds or $7 per animal. With market prices expected to weaken in the fall and winter, by early 2016 producers could be losing $9 per head.
“Continued reductions in feed costs are critical for hog prices to stay above costs for the rest of the year. Current feed costs are the lowest in five years dating back to the spring of 2010,” says Hurt, writing at farmdoc daily. The outlook favors bumper corn and soybean crops this year, which would keep feed prices down, “but everyone knows that weather during the next 90 days will largely determine final yields and be a major factor in feed price determination.”
Retail pork prices peaked at $4.22 a pound last September and have fallen during each following month. The latest national average price is $3.77 a pound, down 11 percent from the record high, said Hurt.