US hog farmers' two-year losing streak ends

A revival in pork exports will help American hog farmers reach breakeven in 2010 for the first time in two years, flagging a 10% jump in beef shipments too.

Hog price prospects had lost some potential to a surprisingly strong litter rate of 9.7 pigs per litter in the September-November period, compared with a figure of 9.5 a year before, which had offset some of breeders' efforts to curb a market oversupply.

"The bottom line is that the data points to a 2010 pork production closer to 2% lower, year over year, than the almost-3% reduction expected last month," the US Department of Agriculture said.

Nonetheless, with a weaker dollar and global economic revival raising US pork exports by 8.4% to 4.5 billion pounds this year, lean hog prices were likely to average US$43-US$45 per hundredweight in the first quarter, up 4.5% year on year.

For 2010 as a whole, lean hogs would sell for US$44-US$49 a hundredweight, a 12% rise on 2009 prices, while feed costs looked set to remain restrained.

"Price forecasts for corn and soymeal imply producer breakeven hog prices in the mid-US$40 per hundredweight range," the USDA said in follow-up comments to last week's revision to farm commodity estimates.

Purdue University estimates that hog farmers lost US$5 billion in 2008 and 2009, hurt first by higher feed prices and then by economic downturn and the impact of the AH1N1 flu, with Iowa State University calculating that producers have lost month in 24 out of the last 26 months.