The American Agricultural Economics Association surveyed its members on various commodity prices forecasts, and specific to live-hog, corn and soybean prices, pork producers will have a tough road. The 2008 survey reveals an average live-hog price of $56.88 for 2009, and a projection that pork production will not turn a profit.
The AAEA survey cited fourth-quarter live-hog prices at $48.36 per hundredweight, then climbing to $51.61 in first quarter 2009. For the second quarter, the survey put live-hog prices at $58.46, $60.25 for the third quarter, and $57.01 for fourth quarter 2009.
To reach those prices, the economists assumed that third-quarter 2008 pork production will be 7.2 percent higher than a year ago, and up 2.4 percent in the fourth quarter. For 2009, they expect first-quarter production to be down 2 percent, second quarter down 2.8 percent, third quarter down 3.2 percent and fourth quarter down 3.6 percent from 2008 levels.
"Based on these forecasts, pork producers that cannot handle more risk should take a long, hard look at what the lean-hog futures contract is now offering for hedge opportunities," University of Missouri Economists Glenn Grimes and Ron Plain wrote in their weekly report. "If the (AAEA) forecasts turn out to be what happens -- and they look realistic with current information -- pork producers on average will lose money through much of 2009."
The AAEA survey also forecast corn prices at the Chicago Board of Trade at $6.69 per bushel by Dec. 1, 2008; $7.04 by March 1, 2009; and $7 by late June.
Looking at soybean meal, the economists predict CBT averages of $375 per ton for Dec. 1, 2008; $396 for March 1, 2009; and $402 for late June 2009.