June 8, 2010
US pork industry to recuperate in 2010
The pork industry is on its way back after taking hard hits in 2009 from high feed-grain prices, the H1N1 outbreak and a poor economy, said Chris Hurt, a Purdue University agricultural economist.
"Grain prices went up in 2007 and stayed there until 2009, but they're finally on their way back down," Hurt said. "People also are starting to get over the H1N1 scare, and slowly but surely, the economy is starting to get better."
The fact that pork supplies are down is good news for pork producers. Since some suppliers had to leave the industry last year, production has already dropped 4% in 2010, Hurt said. The lower pork supplies will help prices stay strong, especially through the summer.
But the strong prices will be costly to consumers, he said. During the first four months of this year, retailers were selling pork at 5 cents less per pound than they were at the same time in 2009. Retail prices will likely to increase in the coming months.
Pork will likely reach a record high price of US$3.10 per pound this summer, Hurt said. "This, along with the world economy recovering at a slow rate and high unemployment, means consumers are likely to stay cautious about their pork purchases," he said.
Hurt estimated profits at US$21 per head for the remainder of 2010, and US$10 for 2011. He said it will take this next year and the next just to recover from the past two years of losses, which were about US$11 per head in 2008 and US$24 in 2009.
Expansion in breeding herds is not expected until early 2011. Although profits should be strong for producers in 2010, bankers are looking for producers' balance sheets to improve before financing expansions.
