More liquidation of the swine herd and permanent closure of some hog operations can be expected over the next 90 to 120 days due to ongoing losses according to the Dow Jones newswire. Those producers not utilizing risk management tools are especially vulnerable.
The failure of the market to turn higher in May amid the outbreaks of H1N1 influenza, initially called swine flu, has been "a back breaker" for some producers.
With equity low or already depleted, some producers are exiting the industry while others are finding it difficult to get the financial backing to stay in business, according to analysts and livestock dealers, says Dow Jones. This is especially true for small and mid-size independent operators.
With export sales down and hog prices that are well below breakeven levels the financial pressure continues to build. The much hoped-for profit from late spring through the summer doesn't appear to be in the cards now.
Ken Jolliffe, an analyst in Cedar Rapids, Iowa, estimates that up to 20 percent of the independent producers in his region are considering leaving the pork industry. Mike Zuzolo, analyst in Lafayette, Ind., said as many as 50 percent of the farrow-to-finish and wean-to-finish operators in his region may consider getting out.
Read more about herd liquidation.
Source: Agriculture Online, Dow Jones Newswires