Each year, the American Agricultural Economics Association conducts an annual outlook survey. Looking at the livestock market for rest of 2006 and into 2007 and the 2006/2007 corn and soybean market, the survey points to the potential for modest hog profits for the last half of 2006. Looking forward to 2007, the consensus estimates show an average price for 51/52 percent lean hogs, U.S. basis of $43.30 per hundredweight. However, AAEA participants who focus primarily on hog markets were less optimistic. That group estimated an average 2007 price at $41.58 per hundredweight live.
For the total surveyed group, the 2006/2007 corn price estimate was $2.48 per bushel. The economists with corn-price forecasting responsibility came in at $2.43 per bushel.
Based on these estimates, an average pork producer will have about a break-even year in 2007 if the higher hog-price estimate is accurate. However, if the lower estimate materializes, there will be some losses.
Glenn Grimes and Ron Plain, University of Missouri ag economists, point out that corn prices have averaged near $2 per bushel this past year. Corn at $2.48 per bushel will add about $2.50 per hundredweight to the average cost of producing hogs.
Soybean meal prices for 2007 are expected to average this year's levels to $5 $10 per ton lower than the 2005 average price.
Source: University of Missouri/ Glenn Grimes and Ron Plain