Market prices for wheat, corn and hogs fell this fall to their lowest level in 10 years, said Purdue economist Chris Hurt, who predicts farmers will lose money on hogs for months to come. “The industry will need to consider a reduction in the breeding herd in the last half of 2017 in order to boost prices back closer to break-evens in 2018,” says Hurt at farmdoc Daily.
Hog farmers are sending a high volume of pigs to slaughter, which is helping to hold down prices, said Hurt, “but shortages of packer capacity seems to be another factor that is an additional downward force on low farm prices.” Hog production traditionally is highest in the final three months of the year. More than 2.5 million head of hogs are being sent to market each week, swamping the capacity of packinghouses.
Two new pork plants are scheduled to begin operations by next fall, which will expand U.S. processing capacity and should allow hog prices to move upward. Slaughter-hog prices averaged $50.23 per 100 pounds in 2015 and are expected to average $45.65 this year, with a similar price in 2017. But production costs are around $49 per 100 pounds, so farmers will sell hogs at a loss for months to come, says Hurt.