After hitting record highs last year, hog prices hit a five-year low in recent weeks, writes Purdue economist Chris Hurt at farmdoc daily. An expansion in hog numbers has “helped create what may be the greatest collapse of hog prices ever. A classic boom-and-bust price pattern.” Hurt says hog prices are likely to average $55 per 100 pounds, compared to last year’s record $76. The downturn in corn and soybean prices will mean lower feed costs this year, which will somewhat offset the lower market price for hogs, says Hurt. Pork production could rise by 6-7 percent this year.
“Pork producers need to be cautious about further expansion until more information can be gathered” writes Hurt. The quarterly Hogs and Pigs report on March 27 “will give clues” to how rapidly herds are growing. “If the industry has already expanded sufficiently to drive prices down near costs of production, further expansion could push the industry into losses,” he said. Feed prices are projected to be the lowest since 2010, but if farmers plant fewer acres of corn, as expected, those prices could be much higher if yields do not meet expectations for this year’s crop.