Profitable live-hog prices, meaning those above $40 per hundredweight, should return by May after a year of low prices, says Ron Plain, University of Missouri agricultural economist. "Hogs should make money through the summer, then hold at break-even levels through the rest of the year," he says.

The real recovery will come later, "If we get a good corn crop this summer, and if feed prices don't skyrocket, hogs could make money in every month of 2004," Plain predicts.

As shown in USDA's December Hogs & Pigs Report, low hog prices– particularly in the second half of 2002– triggered increased sow slaughter, which will lead to a smaller pig crop in 2003. The December pig-crop report shows farrowing intentions from March to May are down 3 percent compared to the same period in 2002.

"Sows are going to town at a heavy clip, and gilts are going to market instead of being retained for the breeding herd," notes Plain. "With fewer hogs, and a reasonable corn price, there should be money in hogs once again."

If there's any doubt, Plain points out that: "The hog cycle is alive and well." The number of sows farrowed peaked in the first quarter of 2002, then their pigs went to market in late summer and fall, hog supplies pushed prices down to uncomfortable levels.

The price road will continue to be rocky before it smooths out. The next few months will see slightly higher prices than the $29 per hundreweight average price expected when the final calculations are completed for the last quarter of 2002. But profit margins will remain tight through the year ahead.

"Pork producers have told me that they are not looking forward to visiting with their bankers (to refinance for the coming year)," says Plain.

However, record-low interest rates will help. "Bankers are in much better position to talk refinancing when the interest rates are low. In the 1980s, when interest rates were 14 percent to 15 percent, lenders had to cut their losses. Now they are better able to wait for postive hog prices to return."

Growing exports have helped and will continue to help the price outlook. "We're heading into what looks like the 12th year of uninterrupted rising pork exports," Plain notes. Japan continues to buy U.S. pork, although they have reduced their beef imports sharply. They are expected to re-enter the beef market this year, but to what degree is still to be determined. Mexico also has become and important U.S. pork customer.

What's more, total meat supplies, including poultry, is projected to be about 2 percent lower this year versus the burdensome supplies of 2002. There are some potholes in the U.S. poultry market in terms of exports with tariffs and quotas poping up. And now that industry is dealing with the uncertainty of Newcastle's disease.

Lending support to the pork market in terms of reducing supplies is the fact that slaulghter weights also have started coming in lighter than in past months. "Carcass weights ran very high in the first half of last year, but they've been coming down in recent weeks," Plain notes.

Key to the future, however, is whether producers will keep those weights down.