“Producers that control feed costs and hedge hog sales in 2006 should have another profitable year,” says Allen Prosch, Pork Central coordinator, University of Nebraska. He contends that futures prices are well above breakeven hog prices for most 2006 contracts.

In addition, corn and soybean meal futures prices also offer opportunities to lock in feed costs well into 2006. This combination offers producers a valuable risk management opportunity to stay profitable.

Prosch also notes that there may be modest expansion in the industry. The restraint producers have shown in keeping live hog supplies in line with live hog demand has kept the industry profitable. “Continuing the restrain on expansion producers has shown may be the next best risk management strategy,” says Prosch.

University of Nebraska