Hog production has gone from profitable to unprofitable in a big hurry, writes Ron Plain, University of Missouri agricultural economist.

“According to John Lawrence, associate dean, College of Agriculture and Life Sciences at Iowa State University, the typical Iowa slaughter hog was sold for a profit of $30.40 in September and for a loss of $3.67 in October.”

That is a drop of $34.07 per head, which is the largest month-to-month decline in the 46 years ISU economists have maintained this data series. Lawrence estimates breakeven for barrows and gilts sold during October was $53.18 per hundredweight live.

USDA is forecasting a new record for the average farm price of corn. “Given futures market prices for corn and bean meal, the breakeven hog price is likely to reach $55 per hundredweight on a live weight basis before the end of the year,” according to Plain. USDA's latest forecast is that 2011 pork production will be up 1.5 percent compared to this year, but down 1.9 percent compared to 2009.

Hog slaughter totaled 2.32 million head last week, down 0.8 percent from the week before, but up 1.1 percent compared to the same week last year. Pork production is down 3.8 percent for the year, but it has been above year-ago for each of the last five weeks.

The December lean hog futures contract ended the week at $68.97 per hundredweight, up $2.02 from the previous Friday.

December corn futures ended last week at $5.34 per bushel, down 54 cents from the previous Friday. March corn ended the week at $5.48 and July corn settled at $5.5525 per bushel.

The December soybean meal contract ended the week at $339.70 per ton, down $8.30 for the week.

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Source: University of Missouri