Spring Pork Rally Hasn

To quote Purdue University Extension Economist Chris Hurt – hog prices normally shoot up in the spring. In fact – according to Hurt – live hog prices rose by an average of about 11-dollars per hundredweight from early April to mid-May in the past five years. But this year – he says prices have struggled to hold onto their early April levels in the low $60s. The lack of a spring hog price rally and record-high feed costs are leading to an unanticipated period of financial losses.

Hurt says some negative fundamentals for hogs in the form of higher-than-expected pork production this spring that contributed to the failure of the spring price rally. In the first quarter – hog slaughter was near expectations. Slaughter numbers were up point-six percent and pork production was up just point-seven percent. But since the first of April – slaughter numbers have been up near four-percent and pork production up near five-percent. Hurt says that’s not enough to have caused the total failure of a spring rally. He says it doesn’t seem to be related to weakened export demand either. Pork exports in the first quarter were up 16-percent.

Early in the year – Hurt says prices for the spring and summer were expected to be in the high $60s. Now the expectation is in the 63 to 65-dollar range. Total costs of production for farrow-to-finish operations are expected to reach 65 to 66-dollars. The previous high for projected cost of production was for the third quarter of 2011 at $63.50 per live hundredweight.

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