US hog producers to lose money in 2009 as feed prices creep up

US hog producers are likely to lose money in 2009 as hog prices would not be likely to cover feed costs, according to a forecast made by the American Agricultural Economics Association members. 

The association expects live hog prices will average US$56.88 next year, according to the University of Missouri's weekly Hog Outlook report.

The report said AAEA economists pegged live hog prices in the fourth quarter of this year at US$48.36, rising to US$51.61 per cwt in the first quarter 2009.

In the second quarter 2009, it would rise to US$58.46, before ascending to US$60.25 in  the third quarter before slipping back to US$57.01 in the fourth quarter.

The prices are based on assumptions that third quarter 2008 pork production will rise 7.2 percent from a year ago, with fourth quarter production up 2.4 percent.

In 2009, the expectation is that first quarter production will be down 2 percent, second quarter down 2.8 percent, third quarter down 3.2 percent and fourth quarter 2009 production will be down 3.6 percent from a year earlier.

University economists Glenn Grimes and Ron Plain in their weekly report urged risk-averse hog producers to look at lean hog futures to hedge their earnings.

In the same survey, AAEA economists forecast CBOT corn prices will be US$6.69 per bushel the first of December 2008, US$7.04 per bushel the first of March 2009 and $7.00 per bushel the end of June 2009.

For these dates, CBOT soymeal is expected to average US$375 per tonne for first of December 2008, US$396 per tonne for first of March 2009 and US$402 per tonne for the end of June 2009.