Looking ahead, Chris Hurt, Purdue University, expects live-hog prices to move from an average near $50 per hundredweight in July and early August to the mid-$40s in September. Further erosion in prices is expected into the fall, when he looks for fourth-quarter prices to average less than $45.

"This means October and early November lows could reach the low $40s," says Hurt. "Prices in first-quarter 2006 could average in the $44- to $48-range, and improve to near $50 for the second quarter."

He does question whether pork producers will be able to cover their costs over the next 12 months.

"Live-hog prices are expected to average around $47 per hundredweight over this time period," he says. But dry growth conditions, especially in the Eastern Corn Belt have added anxiety to the feed-cost outlook. For example, futures prices for corn and soybean meal at $2.40 per bushel for corn and $220 per ton for soybean meal, puts estimated production costs for the coming 12 months around $42.50 per hundredweight.

Given the current outlook, producers can expect favorable returns this summer and next spring, but may have only modest profits in the fall and winter, Hurt says.

Looking back one more time, producers' returns over the past 12 months have helped stabilize their financial conditions. Estimated returns have been $13.50 per
hundredweight, or about $36 per head.

"Those strong returns were welcomed after the industry operated at a loss in 2002 and 2003," he notes. "With little expansion planned in the United States, pork producers can look forward to modest profits over the next 12 months. But, they also need to be aware of the vulnerability of those profits as they watch the weather forecasts and hope for more rain in the Eastern Corn Belt," he concludes.