The odds suggest pork producers will get some holiday cheer in the form of improved hog prices, says one Purdue University Extension marketing specialist.
Pork production has been up 2.6 percent, while hog slaughter has been up 2.2 percent, through November, compared to the same time frame from 2001, says Chris Hurt, Purdue University agricultural economist. Prices through November, had averaged $35 per hundredweight live weight, compared to $46 per hundredweight in 2001, says Hurt, but that may be turning around.
“Bullish indicators, now greatly outnumber bearish arguments,” says Hurt. “The first friendly indicator is an expectation for lower pork supplies in December and through the winter. USDA inventory numbers indicate a 1 percent smaller December slaughter, followed by a drop of 2 percent to 3 percent in the winter.”
Higher corn prices and depressed hog prices resulted in marketing weights coming down. October and November weights were down about 2 pounds per carcass or about 1 percent, says Hurt.
Also, sow slaughter remains high since producers began liquidating breeding herds at the height of last summer’s drought and elevated geed prices, says Hurt.
“But even since last summer, the rate of sow slaughter has averaged 12 percent higher,” says Hurt. “This means that the breeding herd will continue to shrink into 2003.”
“Another factor is that excess pork in cold storage will likely continue to be reduced,” says Hurt. “In August, cold storage stocks were 39 percent greater than the previous year. Today they are down to 14 percent greater.”
The bullish arguments can be extended to include improving U.S. and world economies, and a bullish cattle market that will ultimately result in some consumer substitution of pork for beef, says Hurt.