A U.S. based agricultural economist says, despite the recent dramatic improvements in live hog prices, North American swine herd reductions are likely to continue through the remained of 2010 and into 2011.
Thanks to a smaller meat supply and a modest improvement in pork consumption, North American pork producers are once again turning a profit after losing money from late 2007 through 2008 and virtually all of 2009.
University of Missouri agricultural economics professor Dr. Ron Plain says although higher hog prices inevitably lead to increased production it’ll take time for the industry to recover.
If producers make money long enough we’re going to start saving gilts and expand the breeding herd.
For the time being I don’t think that’s likely to happen.
History says hog farms tend to respond to the amount of money in the bank rather than to price forecasting.
The price outlook is quite positive for this summer and into next year but producers lost an enormous amount of money.
Our calculation says U.S. producers lost six billion dollars during 2008 and 2009.
It’s going to take time before they and their bankers are willing to put more money into this industry and expand sow numbers.
Hog prices are profitable this year.
It’s welcome but my estimate is even when we’re a year down the road we will have recouped only about a quarter of what was lost in the last two years so it’s going to be a long time before hog producers are back in a sound financial situation.
Dr. Plain expects slaughter numbers between Canada and the U.S. to be down another three to four percent this year.
He says slaughter weights have been fairly light this year but will probably be heavier next year offsetting the reduced slaughter numbers so pork production in 2011 is likely to be steady to down one percent.
Source: Farmscape.Ca
