Pork industry facing massive losses
Purdue's Chris Hurt says financial losses of the magnitudes projected here will cause massive erosions of family equity and some bankruptcies.
Published: Aug 30, 2012
A tsunami of red ink is about to wash across the pork industry which is facing losses unseen even in the fall of 1998 when hog prices at times approached zero value, according to Purdue's Chris Hurt. The stressors include: more hogs than expected, rapid sow liquidation now underway, and record feed prices. Losses in the final quarter of this year could be $60 per head, exceeding the previous record quarterly losses of $45 per head in the fall of 1998, he says.
Slaughter numbers in the past two weeks have been up six percent when only about one percent more hogs were expected. This has caused a $10 per hundredweight drop in live prices since late July, with prices now in the low-$60s. The source of those extra hogs is probably related to some delayed marketings due to the summer heat, to a desire to sell pigs more quickly before prices really tumble moving into fall, and to high sow slaughter. Projected prices for the final quarter this year are in the mid-$50s, using current lean hog futures as a base. Tragically, costs of production are expected to be above $75 per live hundredweight for the remainder of the summer, this fall, and winter.
Hurt says losses per head this summer are estimated at $30, to be followed this fall by record quarterly losses of $60 per head. Losses in the first and second quarters of 2013 are projected to be $38 and $5 per head, respectively. Over this one year span, losses may average about $33 per head. That means total losses of around $4 billion for the U.S. industry.
Editor's note: Listen to Chris Hurt's full interview with RFD Radio's Al Jarand next Monday morning on RFD Today on many of your RFD Radio Network stations.
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