Two years after soaring to record highs, “hog prices have collapsed to levels far below break-even,” says Purdue economist Chris Hurt. Hog farmers will lose an average $10 a head this year and $16 a head in 2017 because there are so many hogs being fed for slaughter, they could exceed the capacity of packing plants to handle them.
Market prices for hogs are the lowest since the 2008-09 recession, Hurt writes at the farmdoc Daily blog. Hogs are likely to sell for $46 per 100 pounds this year and around $43 next year while the cost of production is $47-$48 per 100 pounds. Hogs may weigh close to 300 pounds at slaughter — the average was 285 pounds in 2014 — so a $5 difference between production costs and the market price can mean a $10 or $15 loss per hog.
“The issue of inadequate packer capacity should be eliminated in 2017 with the opening of two new facilities in Iowa and Michigan that will expand capacity by around 6 percent,” said Hurt. “The new capacity should … provide the opportunity for farm level prices to be higher. However, this is not likely to be helpful this fall and winter.”