Pork Industry Expects Profitable Year

CHICAGO - Jan 10/06 - SNS -- The pork industry in the United States expected to post its third profitable year in a row, says Chris Hurt, Extension Economist, Purdue University, after having posted losses in the 1998 through 2003 period.

"The financial tide finally turned to black in the spring of 2004 and has been on a winning streak ever since," Hurt said. "Profits in 2004 averaged about $9 per live hundredweight (100 pounds) for farrow-to-finish production. That number was near $10 in 2005 and the forecast for 2006 is for profits to be around $6."

Such an increase in earnings will encourage further expansion in the hog industry, putting it at risk of poor returns in 2007 and 2008.

Chris Hurt's comments continue:

The U.S. inventory of hogs continues to be very stable according to the latest inventory update from USDA. Total inventory numbers in the December report were up only 0.4% with the number in the breeding herd up 0.7% and the market inventory up only 0.3%.

Overall, the U.S. breeding herd has been trending lower as a result of the sow herd shifting to Canada and as a result of higher productivity. The U.S. breeding herd dropped from near 7 million head in 1998 to about 6 million head by 2002.

Since then, the breeding herd has been in a narrow range from 5.9 to 6.1 million head. The current 0.7% increase in the breeding herd is extremely small by historical standards, but is the largest annual increase since 2000. The 2005 expansion was an increase of 42,000 head.

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