Live-hog prices have declined about $10 per hundredweight from late November's seasonal highs, now averaging close to $40 hundredweight on a live-weight basis. That puts prices 20 percent to 25 percent lower than this time last year. However, at the time, prices where abnormally high in a contra-seasonal trend, notes Tim Petry, livestock marketing economist, North Dakota State University.
This year's seasonal decline has been closer to normal, with fourth-quarter pork production likely to average 2 percent higher than last year. For the year, 2005 pork production will be up about 1 percent, says Petry. That's on top of 2004's 3 percent growth. In the last two years, pork production's profitability has been demand driven-- typically supply has driven cyclical price changes.
So, what's ahead for 2006?
It looks like pork production will increase around 2 percent. Domestic pork demand will feel pressure from expanding production of competing meats-- chicken and beef. High-protein diets are no longer a driver. Export demand also could soften, if Asian countries open doors to U.S. beef.
Expect hog prices to follow normal seasonal patterns, which means lower prices than in 2005, says Petry.
USDA Hogs and Pigs Report on Dec. 28, will provide a clearer perspective of what to expect in 2006.