"Although it now appears that U.S. pork production will rise by about 1 percent, large sales to foreign customers mean tight supplies here at home. In addition, per capita beef supplies will drop by about 2 percent, resulting in less red meat competition," he said.

Pork production in the first half of 2012 should be up less than 1 percent as farrowing intentions are down 3 percent for this summer and down 1 percent for this fall. Somewhat higher production will come from more pigs per litter and from higher market weights.

Hog prices set daily records at $78 per live hundredweight in late June. Moderation is expected from these extremes, with third-quarter prices averaging in the mid-$60s.

Prices are expected to be in the very low $60s this winter before moving back to the mid-$60s for the spring and summer of 2012. For 2011, live prices are expected to average a record $63.50 compared to $55 last year.

"Corn price volatility is a major component of the pork production uncertainty," he said. "Corn prices reached their peak on June 9 when Midwest cash prices were commonly $8 or higher in some locations."

Declines in corn prices of as much as $1.50 per bushel after the June 9 highs have dramatically changed the anticipated costs structure for pork producers.

"Using current corn costs of $6.50 per bushel this summer and $5.90 for the fall, costs of production for farrow-to-finish production is about $63 this summer and $60 this fall. This means the production sector would have a profit potential of about $10 per head in the third quarter and $2 per head in the fall," he said.

Hurt said that some profit is likely in 2012. Given the current outlook, he predicted that profit would average about $7 per head, but much uncertainty remains.

"Will this modest profit potential result in herd expansion? The answer is a clear no! Pork producers know that corn and soybean yields are not yet assured and that the feed price outlook could still change sharply, depending on final yields in the United States and the northern hemisphere," Hurt said.

For this reason, there will be almost no movement to expand herds until sub-$6 cash corn prices are assured this fall. At that point, the expansion discussion can begin, which means it will be very late 2012 before pork production could begin to rise, he added.