Pork profits on the horizon

Pork producers have begun the chant “four more months” as they can now see the light of profits as they are set to emerge from a tunnel of losses.

That tunnel of darkness stretched from the spring of 2012 through the winter of 2013, with average estimated losses of $18 per head, primarily due to high feed prices.

Feed prices reached a summit in the third quarter of 2012 with the peak of the drought. Estimated total hog production costs shot up $10 per live hundredweight, reaching an estimated $72.

Costs last fall and this winter dropped about $4 per hundredweight and are expected to moderate an additional $8 with normal 2013 crop production. By fall that could put estimated costs of production around $60 per hundredweight.

The December Hogs and Pigs report from USDA provides evidence that 2013 pork supplies will not be down as much as the two percent that had been anticipated. Rather, pork supplies for the year may be closer to unchanged with a one-to-two percent reduction in the first-half offset by a one-to-two percent increase in the second-half of the year.

The size of the breeding herd was unchanged as of Dec. 1, 2012 when the expectation was that the herd had been reduced by at least one percent.

In addition winter farrowing intentions are unchanged, compared to a two percent reported reduction in the previous inventory report. Market weights will also contribute to increasing pork supplies in the second-half of the year.

First-half weights are expected to be down about one percent as long as feed prices remain high. But those weights will begin to rise late in the summer, assuming feed prices drop with more normal crop production.