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. 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.
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. <Read More>
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