Purdue University Extension Economist Chris Hurt says pork profits are on the horizon. With the peak of the drought – Hurt says feed prices reached a summit in the third quarter of 2012. He says estimated total hog production costs shot up 10-dollars per live hundredweight – reaching an estimated 72-dollars. Last fall and this winter – Hurt says costs dropped about four-dollars per hundredweight and are expected to moderate an additional eight-dollars with normal 2013 crop production. According to Hurt – that could put estimated costs of production around 60-dollars per hundredweight by fall. Due to small beef supplies, continued strong pork exports and modestly improving consumer incomes – Hurt says hog prices are expected to be somewhat stronger in 2013. Live prices averaged about 62-dollars in 2012. They are expected to rise to near 66-dollars for 2013. By quarter – prices are expected to average around 63-dollars in the first quarter, 71-dollars in the second quarter and 69-dollars in the third quarter.
Hurt says fall 2013 and winter 2014 prices are expected to reflect higher pork production with prices averaging around 61-dollars. Hurt says losses will continue in the first quarter of 2013 and are expected to average about 15-dollars a head. But in late April or early May – when the spring hog price rally is underway and meal prices edge lower with the South American soybean harvest – Hurt says a return to profitability is expected. According to Hurt – profits are projected at about 10-dollars per head for the second and third quarters before returning to breakeven in the fall of 2013 and winter of 2014. Hurt notes much will hinge on the drought situation in the western Corn Belt and Great Plains states. He says poor crops there in 2013 could send corn and soybean meal prices to new record highs – which would likely extend losses for another year. But he says normal world yields in 2013 would likely send feed prices lower than current new-crop futures are indicating. He says that would multiply pork profitability.