US pork producers might hit red figures in 2008
Despite continuous growth of the number of US pigs in
the third quarter of 2007, the US might be facing the end of 42 months of
profitability, market experts warn.
Increased feed prices are a major cause of a possible
decline in growth. "We're looking at hog prices and feed costs coming together
and taking away the profitability that was there," said Jim Robb, director of
the Livestock Marketing Information Centre.
"On a cash to cash basis, we
expect to be in the red in the fourth quarter and that will continue at least
through the first quarter of next year.
"Then attention turns to how
grain markets go in the second quarter of next year whether we can return to
profitability in the hog complex or whether we continue to struggle and then
start to see some significant impact in terms of breeding herd numbers maybe
creeping in around that time frame."
Mixture of elements
Chris Hurt, agricultural economics
professor at Purdue, added that a mixture of elements is building up to a
less-than-profitable year in 2008. He said that glory days, which started back
in 2004, are slowing to an end, as a result of higher feed prices, energy costs
and even building costs.
In addition, he mentioned an oversupply of hogs
in the market channel. Packers simply could not be able to take the extra
The extra hogs come from Canada for processing, up to
approximately 9% of total slaughter in the US. Higher productivity also results
in more pork.
Hurt said he expects to see some herds trimmed to make
up for the lower prices. That drop in production would drive up
The US inventory of all hogs on
September 1 was 64.6 million animals, up 3% from a year ago and the same from
the last quarter.
Breeding inventory was at 6.14
million head, a rise of 1% compared to last year. Market hog inventory was at
58.5 million head, up 3% from last year.
â€¢ Livestock Marketing Information Center
â€¢ Purdue University
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