Strong second-half pork production, coupled with increases in beef and poultry supplies, is expected to result in lower hog prices which will likely pressure producer margins despite lower feed costs. While lower hog prices tend to favor processor margins, added competition from beef and poultry could constrain those as well.
Third-quarter commercial pork production is expected to be 6.1 billion pounds, 1.9 percent above third-quarter 2015, and 6.6 billion pounds in the fourth quarter, 2.6 percent over a year ago.
Prices of live equivalent 51-52 percent lean hogs are expected to average $49-$50 per cwt in third quarter, more than 9 percent below a year ago. Fourth-quarter prices are expected to average $39-$41 per cwt, about 10 percent lower than a year earlier.
On Sept. 30, 2016, USDA will release the Quarterly Hogs and Pigs report, which will detail September 1 inventories, as well as farrowings, litter rates for the June-August pig crop, and producer farrowing intentions for the September-November and December-February 2017 quarters.