August 19, 2004

US Pork Production Seen Higher, But Prices To Remain Profitable

Pork production in the United States will continue to expand over the next 17 months. Prices will fall but still remain profitable. That is the forecast of economists surveyed by University of Missouri agriculture economist Ron Plain.

This year's survey of 20 members of the American Agricultural Economics Association predicts further expansion in pork production and lower, but still profitable, hog prices over the next 17 months.

On average, the group expects commercial pork production during the third quarter of 2004 to be up 3.2% and fourth quarter production to be up 0.8% from last year's level (there is one less slaughter day in the fourth quarter this year than last).

The increase in production is expected to continue in 2005 with first quarter pork production up 0.9% from a year earlier, and second quarter production 1.5% higher. Regarding the second half of 2005, the group foresees third and fourth quarter pork production to be 1.6% and 1.7% higher, respectively. For calendar year 2005, the group expects commercial pork production to be 1.4% higher than in 2004. If the consensus forecast is correct, then 2005 will be the fourth consecutive year with record pork production.

Survey respondents expect the live price of 51-52% lean barrows and gilts in Iowa/Southern Minnesota to average $54.10/cwt during the current quarter and $47.54 during the fourth quarter of 2004. They estimate the 2004 annual average at $50.11/cwt, which would be $10.66/cwt higher than the previous year and the highest for any year since 1997.