There is an old saying that, “Life is what actually happens
when you’re planning on something else!” That adage is playing out for pork
producers this spring. The spring hog price rally has not occurred and feed
costs have now pushed to record high levels. This combination is resulting in a
disappointing period of financial losses this spring and summer that was not
anticipated earlier this year.
Hog prices normally shoot up in the spring. In fact, in the
past 5 years, live hog prices rose by an average of about $11 per hundredweight
from early April to mid-May. This year, prices struggled to hold on to their
early April levels in the low $60s. The reasons for the lack of a spring rally
are not totally clear. Perhaps there was too much anticipation of high spring
and summer hog prices earlier in the year. June lean hog futures, for example,
reached levels equivalent to about $76 per live hundredweight in late February.
This was just before the “lean finely textured beef” issue hit the media waves
that sent livestock futures prices down. The lowest cattle futures prices came
on more bad news announcing a fourth BSE cow on April 24. Lean hog futures then
bottomed about 10 days later. <Read More>
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