Hog price recovery months away
Reuters — U.S. pork production in October hit a record high as the hog slaughter surged to an all-time high of 10.86 million head.
The latest USDA data shows more hogs passed through U.S. packing plants last month than ever before as farmers liquidated their herds as the worst drought in half a century shrivelled fields, catapulting feed prices to historic highs.
The U.S. Department of Agriculture said pork production in October rose nine per cent from the previous year to 2.21 billion lbs. The October slaughter number was 10 per cent higher year on year and surpassed the previous record of 10.654 million in October 2008.
The rush to slaughter could benefit consumers in the near term as increased supplies weigh on pork prices, but costs are expected to go up by mid-2013 as hog supplies tighten, analysts said.
Hog numbers typically increase during autumn, particularly after unusually warm weather last spring improved sow breeding rates.
And, packers last month had 23 weekdays and four Saturdays to process hogs, compared with 21 weekdays and five Saturdays last year in October, said USDA. The flood of hogs strained the bottom line of producers who in September lost about $54 per head, according to the Iowa State University hog producer profit index.
University of Missouri livestock economist Ron Plain forecast fourth-quarter 2012 hog losses to average $32.50 per head and about $24 for the first quarter of 2013.
He expects producers to be about $0.70 in the hole in April with May being the first profitable month at $2.
Chicago Board of Trade corn futures averaged $7.56 per bushel in October. Although they were down from the Aug. 10 record high of $8.43-3/4, they were the third highest on record. Heated competition between livestock producers and ethanol manufacturers for corn, the major ingredient in cattle rations, is further fuelling feed prices along with hay costs that doubled as drought withered fields and pastures.
“We not only saw a liquidation of market hogs, but we also saw sow slaughter move about four to five per cent higher than last year during the month of October,” said Allendale chief strategist Rich Nelson.