March 27, 2006

Q2 US hog prices expected to be lower on-year, strong exports

Second quarter US cash hog prices are forecast to be below levels seen the past two years but still profitable for producers.

Strong export sales and lower domestic demand are expected to impact prices this quarter.

April-June price forecasts average from the mid-to-high 40s on a live basis, or the high 50s to mid 60s dressed. Prices in March is just under US$58 dressed, based on the US Department of Agriculture's figures, which meant about US$43.50 live.

Cash hog prices during the first quarter are about 18 percent lower than a year ago despite exports rising 20 percent over the same period.

Low chicken prices are partly to blame for the decline in hog prices in the first quarter, market analysts and agricultural economists said

Also, pork production is at a record high, up nearly 3.5 percent through the first two months, according to USDA.

Marginal increases are expected in second quarter hog slaughter and carcass weights over a year ago due to abundant pork, beef and poultry supplies. Hog prices in the April-June period are expected to average from the high $50s to low $60s on a dressed basis, about 11 percent below the same period in 2005, according to analysts.  

Hog prices throughout 2006 are expected to be below those a year ago, said Ron Plain, agricultural economist at the University of Missouri. Summer prices are expected to be in the high $40s on a live basis before sliding into the high $30s for the final quarter. The upside for pork producers is that they have had strong export growth in the past two years, and it might be better than expected this year, he said.