Live hog prices in the US are expected to average about US$51 per live hundredweight for 2010 with costs around US$47, translating into a profitable year of about US$10 per head, compared to losses in the previous two years.

 

According to Purdue University Extension Economist Chris Hurt, the best of those profits will come from this spring and summer.

 

However, Hurt warned that US$40 of losses (US$17 and US$23 per head in 2008 and 2009, respectively) over the past two years will not be recovered with US$10 per head of profits in 2010.

 

"The industry should not interpret the outlook for a little black ink in 2010 to be a signal to race back toward expansion. As an example, a US drought in 2010 would quickly send feed costs back above breakeven levels," he said.

 

Hurt pegged the profitability on reduced supplies, improved demand and lower feed costs. He also noted slimmer retail pork margins, which dropped to about US$1.60 per pound this winter from about US$1.85 last summer, increasing producers' share to 30% from 23% of retail pork sales.

 

Stronger demand is expected to come from higher exports, a recovering US economy and the passing of AH1N1 from front-page news. Domestic per capita pork supplies are expected to be down 4-5% this year.

 

Live hog prices are expected to move into the higher US$50s in the late spring and early summer. Second-quarter prices are expected to average in the mid-US$50, and third-quarter prices about US$1 lower. The last quarter of 2010 and winter of 2011 may see prices drop back seasonally to the US$47-49 range, Hurt predicted.