WEST LAFAYETTE, Ind. — Retail pork prices will keep rising
to record highs this summer as the number of hogs going to market over the next
several months will be lower than expected because of the PED virus, smaller
spring farrowings and growing foreign purchases of U.S. pork, Purdue University
agricultural economist Chris Hurt said.
But he also expects the price increases to level off in the
fall and move somewhat lower into the winter as producers benefiting from higher
profits increase production.
Although producer profits were at a record high near $70 per
head in the second quarter this year, he said the record will be surpassed this
summer, with third-quarter profits expected to exceed $90 per head.
“These extremely high profits are clear signals for
producers to increase pork production,” said Hurt, who analyzed the U.S.
Department of Agriculture’s Hogs and Pigs report, released June 27. “The report
did reveal that producers have received this signal, and they intend to increase
farrows by 4 percent this fall.”
If producers start the expansion and the porcine epidemic
virus that has been killing piglets is better controlled, pork supplies can
begin to grow by next spring to 4 percent to 6 percent in the last three
quarters of 2015, Hurt said.
“More relief from record-high retail pork prices can be
expected in the second half of 2015 as pork supplies build,” he said.
While he believes that pig losses from PEDV will likely
trend lower this summer, he said the USDA report suggests that the disease is
far from controlled, with the virus apparently continuing to inflict greater
numbers of deaths in the spring than had been expected.
“The general opinion had been that the PEDV death losses
would be reduced as the weather warmed this spring, because PEDV does not spread
as readily in warm weather,” Hurt said.
Death losses of about 8 percent in the winter were still
about 5 percent in May.
There was expectation that the nation’s breeding herd
already was in expansion, Hurt said. The industry had returned to profitability
in the fall of 2013 as corn prices dropped sharply, and pork producers had
earlier indicated they would farrow 2 percent more sows over the spring.
The USDA, however, found that the breeding herd was down
fractionally and that the spring farrowings also were down modestly.
Record-high retail beef prices have some consumers looking
around the meat case for alternatives such as pork. In May, USDA estimated the
average grocery store price of beef cuts at $5.91 per pound; the average cut of
pork, on the other hand, was $4.10 per pound.
“Even though this was also a record pork price, it was $1.81
a pound lower than beef,” Hurt noted.
He also said foreign consumers have been strong competitors
for limited world supplies of pork.
“Losses from PEDV have been highly publicized since
February, and this has seemingly contributed to aggressive foreign buying of
pork in an attempt to avoid the summer pork shortages resulting from peak baby
pig deaths last winter,” he said.
As a result, prices for live hogs in the first half of 2014
averaged a record of about $80 per hundredweight, nearly 25 percent higher than
the same period in the previous year.
“The full impact of smaller pork supplies will be felt this
summer with new record-high hog and pork prices,” Hurt said.
Third-quarter live hog prices are expected to average in the
low-to mid-$90s before moderating in September and moving downward to the low-to
mid-$70s for the final quarter of 2014.