US hog producers are in for a tough time as larger US swine numbers, together with higher quarterly prices for 2008 corn, foreshadow lower 2008 hog prices and continued hog producer losses, according to  USDA's ERS Livestock, Dairy and Poultry outlook released Friday (January 18, 2008).

Live equivalent prices for 51-52 percent lean hogs in 2008 are expected to range between US$41 per cwt (hundredweight) and US$44 per cwt, more than 9 percent below prices in 2007.

The Quarterly Hogs and Pigs released on December 27, 2007 saw upward revisions in key parameters such as farrowings, pig crops, and litter rates, explaining large year-over-year increases in fourth-quarter 2007 production, and point to continued production increases in 2008.

USDA\NASS added almost 1.1 million head of hogs to the previously reported inventory of market hogs for June 2007. The revised June inventory is an important explanatory factor in the comparatively large (+3.3 percent) year-over-year increase in third-quarter 2007 pork production.

Upward revisions to the previously reported September 1 total hog inventory (+941,000 head), and to the March-May farrowing numbers (+67,000 head), pig crop (+755,000 head), and litter rate (from 9.15 pigs per litter (ppl), to 9.20 ppl), were important contributors to the expected 9.5 percent increase in fourth-quarter pork production.

The December report indicates that production increases in 2008 will likely derive from larger summer 2007 and fall 2007 pig crops, and year-over year larger December-May 2008 farrowing intentions.

The December report raised the June-August pig crop slightly on the basis of slightly larger farrowings and a record-high littler rate of 9.24 ppl.

September-November farrowings came in higher than previously reported intentions, and when combined with a continued record-high litter rate of 9.24 ppl, yielded a 4 percent year-over-year larger fall pig crop.

Fyrthermore, first-half 2008 producer farrowing intentions stated in the December report indicate that farrowings will be 1 percent above the December-May period last year.

Taken together, a 4-percent increase in June-November pig crop and 1 percent larger December-May farrowing intentions will likely translate into 2008 commercial pork production of almost 22.8 billion pounds, almost 3.7 percent larger than 2007 production.

USDA is forecasting corn prices to be more than 32 percent higher than in 2006/07.

Higher feed prices can be expected to widen the existing negative gap between costs of producing market-ready slaughter hogs and the price that producers receive for finished animals. According to Iowa State University's Estimated Returns for Farrowing and Finishing Hogs in Iowa, the cost of producing a market-ready slaughter animal in December exceeded the hog prices by more than US$25 per head.