Purdue University agricultural economist Chris Hurt indicated yesterday at the farmdoc daily blog (“Weekly Outlook: More Pork in 2017 With Higher Hog Prices?“) that, “The latest Hogs and Pigs report released on December 23 indicated that pork supplies in 2017 will be larger than pre-report expectations.”
Dr. Hurt explained that, “Hog prices were extremely depressed in the final quarter of 2016 when live prices averaged about $37 per hundredweight. That was the lowest quarterly price since 2003. The lowest prices were in mid-November, touching the extremely low $30s. Recovery came quickly with prices rising to the lower $40s by the end of the year. For all of 2016 live hog prices averaged about $46.
“What will hog prices be in 2017? With three percent higher production one might expect annual prices to be lower, but there are additional items to consider. First, retail prices did drop in 2016, but there is opportunity for those prices to come down more. Lower retail prices will stimulate the quantity of pork that consumers purchase. Secondly, USDA expects exports to expand by five percent which will move more of the increased production to foreign customers. Finally, with the addition of new processing capacity, the farm-to-wholesale margins are expected to drop. Lower margins at the processing stage may contribute to stronger bids to hog producers.
“Live hog prices are expected to be about $48 in 2017, $2 higher than in 2016. By quarter prices are expected to average $45 in the first quarter, the very-low $50s in the second and the third quarters, and then $43 in the final quarter of 2017. A range of $2 higher or lower would be reasonable for price projections.”
Yesterday’s farmdoc update added that, “Pork exports to China will bear watching in 2017. Last year, exports to China nearly doubled growing to near 16 percent of total exports. Also of deep interest to the pork industry in 2017 will be the position of the new administration on trade issues and how that might impact agriculture. Mexico became the number one destination for U.S. pork in 2015 and 2016 so that trade relations with Mexico will need to be watched carefully for potential impacts on the hog market.”
