The highest hog prices on record will soon be arriving. These may be the highest hog prices for the next several years as well, especially if corn and soybean shortages can be reduced somewhat this summer with favorable growing conditions.

On the other hand, if 2011 turns out to be a short crop production year, then the previous statement will be invalid as surging feed prices will force added liquidation of the hog herd this fall. But, you already knew how much was riding on upcoming crops.

USDA’s March Hogs and Pigs report implied that pork supplies will be somewhat higher this year. However, demand factors are more important to hog prices now than supply. Those demand factors include the continued strong growth in export demand, the continued economic recovery in the U.S., and inflation in commodities.

The report indicated the market herd was up nearly one percent, primarily as a result of a somewhat larger than expected winter pig crop. This means pork production will likely be up somewhat over one percent in 2011.  

The breeding herd was also up modestly compared to year ago numbers. This is the first time since March 2008 that the breeding herd increased. The herd has been in decline for the last three years as producers were adjusting the herd due to high feed prices and large financial losses.

Producers indicated intentions to reduce farrowings by three percent this spring and again this summer. If producers follow through with these intentions, the size of the fall and winter pig crops will be smaller once again. North Carolina has seen the largest reduction of the breeding herd over the past three years, accounting for about 40 percent of the national reduction. In contrast, the combined states of Minnesota, Iowa, and Missouri have accounted for only 24 percent of the decline.