Slaughter of pigs in US surges

Purdue University academics have said that the US pork industry “is facing losses unseen even in the fall of 1998, when hog prices at times approached zero”.

Purdue University forecasts for US hog producers’ profits, per animal as follows:

Q3 2012: -$30
Q4 2012: -$60
Q1 2013: -$38
Q2 2013: -$5

High grain prices, besides raising hog producers’ feed costs, have prompted a wave of herd liquidation which has driven animal values lower, with Chicago hog futures, on a front contract basis, down more than 20% over the last month.

‘Short-term carnage’
Hog producers “tragically” face feed costs of more than $0.75 per live hundredweight (45.4kg) of hog “for the remainder of the summer, this fall, and winter”, well over the prices expected at $0.55 per hundredweight, Purdue said.

This implies record quarterly losses of more than $60 per animal, beating the previous high of $45 per head set 14 years ago.

“Financial losses of the magnitudes projected here will cause massive erosions of family equity and some bankruptcies,” Purdue economist Chris Hurt said, forecasting “short-term carnage” and adding that producers were still recovering from losses in 2008 and 2009.

“The irony is that hog production may return to profitability by mid-summer 2013 when meal prices begin to moderate, hog prices move to record highs, and rain and reasonable temperatures bless our nation’s corn and soybean fields once again.”