The cost of raising livestock is falling fast. Corn prices dropped nearly $2 per bushel from mid-July to mid-September.
Calculations by the Economics Department at Iowa State University indicate the average breakeven price for barrows and gilts peaked at a record $74.13/cwt of live weight in January 2013.
Grain futures indicate breakeven prices for hogs could be under $60/cwt live ($80/cwt carcass) by the end of 2013 and could approach $55/cwt live before turning higher in mid 2014. Lower feed costs are the main reason hog profits are expected to continue through 2014, however a short crop in 2014 would change that.
A lot of people expected USDA’s September Hogs and Pigs report to show the impact of the PED virus. It didn’t. USDA-NASS says the average number of pigs per litter during June-August was up 2 percent from a year ago at a record 10.33 head.
Pigs per litter this summer was well in line with the recent trend. The pig crop has been above year-ago levels every quarter since the summer of 2003. Does this mean the impact of the PED virus has been negligible? Did the September USDA survey miss the affected farms? Time will tell.
Hog prices stay above year-ago levles
USDA says the 30.21 million head June-August pig crop was the largest ever.
It was up 1.9 percent from a year ago. The pig crop has been above year-ago levels for 12 of the last 13 quarters. USDA also said the spring pig crop was a record, however, late summer-early fall hog slaughter was well below the level indicated by USDA’s reported market hog inventory. For the 10-week period beginning in mid-August, hog slaughter was 5.5 percent below year ago and 4.2 percent lower than indicated by USDA inventory numbers.
The unexpected shortfall in slaughter kept hog prices well above year-ago levels.
Editor’s Note: Dr. Ron Plain is the D. Howard Doane Professor of Agricultural Economics and Extension Economist in the College of Agriculture, Food and Natural Resources at the University of Missouri, Columbia, Mo.