CHICAGO – U.S. hog farmers are making money for the first time in a year after prices surged to a two-decade seasonal high and feed costs fell, spurring them to expand herds that will yield the most pork on record.
About 5.882 million sows were withheld for breeding by June 1, the most in four years, with a record 10.31 pigs being born per litter, Department of Agriculture data show.
The cost of corn, the main feed grain, tumbled 32 percent in the past year.
Hog futures for December, which rose as high as 83.7 cents last month, will drop 8.2 percent to 75 cents a pound in Chicago by the time they settle, according to the median of nine analyst estimates compiled by Bloomberg.
Cheaper grain and higher hog prices are reversing producer losses that an Iowa State University economist estimated at $33 per animal and cut Smithfield Foods Inc. earnings by 49 percent last year.
Hog farmers probably will earn $15 a head in the three months ending Sept. 30, according to Purdue University. The USDA predicts pork output will rise 3.1 percent to a record in 2014, easing pressure on global meat prices that rose the most in nine months in June.
Profits are going to lead to expansion, and that’s going to lead to more hogs and lower hog prices, said Ron Plain, a livestock economist at the University of Missouri in Columbia who has studied the industry for three decades. We’re going to end up with more pigs being born in the second half of this year than anticipated. That’s going to be a drag on 2014.