Based on the latest USDA Hogs and Pigs report, pork production is up which may mean profits for producers will be down. The latest USDA report forecasts that US pork production will be up 7% in the second quarter of this year, 8% in the summer quarter, and around 6% in the fall. According to Purdue Ag Economist Dr. Chris Hurt, this means, “We will see pork supplies 6% to 8% higher for the rest of the year.” While higher than many had predicted at the beginning of the year, it is well off the 10% increase in production we have seen in the past. Futures markets have hog prices averaging about $51 cwt, but Hurt thinks they will actually do better than that, “My personal feeling is that we will be at least a dollar or two higher than that, up near that $53 mark.”
This continued expansion is good news for pork consumers who will see a continued decline in prices, but Hurt says it means that profits will be thin for producers, “With an estimated average price of $53 per live CWT for 2015, we see pork producer profits averaging about $1 per CWT.” Hurt said, based on current feed costs, he sees the cost of production averaging about $52. Thus, for the entire year, the profit margin would be about $2 per head with the best profits coming during the third quarter and with small losses in the first and fourth quarters. Hurt added that, “These lowly expectations for positive returns should keep producers from making further expansion plans.”
