Economist expects producer losses for rest of 2012

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Near-record high feed prices and higher hog slaughter levels have nearly eliminated the profit opportunity for pork producers for the remainder of 2012, according to Chris Hurt, Purdue University agricultural economist. His comments were made Tuesday in an interview with Mike Adams, AgriTalk host.

Hurt says high expectations for hog profits at the beginning of the year are being ratcheted lower along with the outlook for the sector. “The spring rally in hog prices just did not show up.”

The economist predicts a loss of around $5 per hog this spring and summer with a loss of $3 to $4 per head in the 4th quarter. “Right now, it looks like a breakeven situation or a small loss for hogs this year, and breakeven for 2013.”

High retail pork prices haven’t helped the disappointing profit outlook. “We have seen record-high pork retail prices this year- $3.48 per pound- which has hindered the movement of pork through the retail sector,” Hurt adds. “Retailers are slow to bring the price down.”

About 4 percent more hogs came to market this spring, with most at higher weights, he says. As a result, pork supplies have increased since April. “We’re producing about 5 percent more pork which has given us a little more disappointing outlook at this point.” A USDA report issued Tuesday revealed pork supplies in cold storage increased by 20 percent.

Hurt is hopeful that exports, as well as favorable summer growing conditions for crops, will help improve the hog price outlook this summer. Export demand remains robust and is up 18 percent year-to-date.

Feed prices are the main factor in profitability of livestock production and Hurt urges producers to hold off expanding until the 2012 corn and soybean crop yields are known.



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