We've all been tsk-tsking about those poor pork producers for what, several years now, it seems. But what if they actually made tough decisions and are on the way to recovery?
Analysts on a post-report call sponsored by the Pork Board agreed Friday's number could skyrocket hog futures prices on Monday and will very likely end sow culling.One consequence of some brightness on the horizon may be a little more confidence in the feed usage numbers. With hog numbers sort of stabilizing, corn demand from that important industry could be written in something other than pencil.
"I think culling is likely to come to an end," said Len Steiner, principal at Steiner Consulting Group. "This report will give them some reasons to hang around."
The report showed all hogs on March 1 down 3 percent from a year ago compared to analysts surveyed by Reuters expecting a 1 percent decline.
It put hogs kept for breeding down 4 percent compared to an expected 2.6 percent decline and hogs kept for marketing down 3 percent compared to an expected less than 1 percent decline.
Compared to what Meyer estimates as a break-even price of $65 per hundredweight on a carcass weight basis, Erica Rosa, an economist with the Livestock Marketing Information Center, predicted hog prices will average $68 to $70 this year, which would be a 20 percent to 22 percent price increase from last year. [ More, free registration required]
There is more than a little way to go to recovery for most producers, but any bump in prices might calm some nearly hysterical lenders into extending needed credit before it's too late.