2015 May Be Year of Break-Evens for Hog Producers

 

It looks as if 2015 will be a much different year than pork producers expected. Last year, the industry saw some record high prices, but since last fall, prices have fallen significantly. What was supposed to be a year of expansion and profit, may now be a year of break-evens. Economists say the hog market changed quicker than anticipated that’s because of last year’s PEDv scare. Those who could expand, did. More meat hit the market and the demand has yet to pick up.

Producer Rebecca Schroeder of Whiteshire Hamroc in Albion, Indiana says she’s felt the price impacts over the last two months.

“I think 2015 will be about break-even or some profit margins,” said Schroeder.

“What it feels like now is 2014 was an extremely profitable year. Then, more quickely than we anticipated, we took that picture out and it looks like a break-even type of year,” said Purdue University, Ag. Economics Professor, Chris Hurt.

Hurt says as expected, expansion is happening.

"We're seeing three to four percent more pork supply coming at us the first half of this year. This will probably mushroom into the 6 to 7 percent higher supplies in the last half of the year," said Hurt.

That was more than needed to make up for PEDv losses.

“We ended up being down only two percent on pork production but this got the buyers afraid about being short on pork,” said Hurt.

Schroeder says last year the company was impacted with PEDv. As a result, they upped their weights to deal with the loss.

“We fed pigs longer than we normally would into heavier weights and so we were able to re-coop with those losses but not 100 percent,” said Schroeder.

Her plan is different this year. She’s decreasing market weights and trying to decide to move ahead with expansion or put it off another year.

Schroeder said, "We've looked at doing things differently. Are we as efficient as possible to minimize costs and gain as much value as possible?"

USDA released its long-term forecast for pork prices. They think prices will average $66 this year, then drop into the $50 range for the next eight years. With the projected cost of production, Hurt says waiting to expand may not be a bad idea. Words much different than what was heard just a few months ago.

"There's expansion in process. Buildings are being built. Producers should go ahead and finish those out. However, maybe put those next expansions or buildings on hold. Let's see if we can get through this low price period and begin to build recovery," said Hurt.

Hurt says hog weights are up one to two percent higher above last year. He expects that to continue into April

As of February 15, PEDv numbers were about a third of what they were last year during the peak of the winter outbreak.

 

 

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