USDA’s June Hogs & Pigs report came in almost exactly at trade expectations, which should mean profitable times are ahead for most producers.
Ron Plain, University of Missouri agricultural economist, says there will not be a lot of near term movement in the futures market. He also notes the United States is killing fewer hogs than a year ago, which should cause prices to be higher for the remainder of the year. Here are Plain’s price projections:
Quarter Livewt. Carcass
Q3 ‘03 $42-$43 $59-$60
Q4 ‘03 $37-$38 $52-$53
Q1 ’04 $39-$40 $52-$53
Q2 ’04 $41-$42 $56-$57
Q3 ’04 $40-$41 $55-$56
Q4 ’04 $36-$37 $50
However, there was some cause for concern in the report. Both the summer farrowing intentions and the March-May farrowing intentions were well above trade expectations. Pigs per litter also was up slightly, after seeming to hold steady most of last year. This means the fall pig crop could be almost as large as last year’s fall pig crop, says Plain. That would be negative for prices.
“If we actually farrow that many sows in the fall it is very bad news, but I don’t have much confidence in that category of this report,” says Plain. “The rest of the report came in amazingly close to expectations and the farrowing intentions doesn’t jibe with those numbers, or with the sow and gilt slaughter numbers.”
Plain does say that the farrowing intentions are somewhat worrisome and producers might want to look at some hedging options for hogs in early 2004.
Overall, Plain says it looks like pork producers can have enjoyable times for the rest of theyear, as far as prices go. He also says that last year producers pulled their marketings forward into the third quarter, causing prices to drop during this time, but avoiding a fourth quarter disaster. Because of this, prices in the fourth quarter might be 40 percent above year-ago levels, says Plain.
To read more of the report’s numbers, go to www.usda.gov