Lower production leads to high hog prices

COLUMBIA, Mo.– Hog prices in 2014 have been higher than any previous time.

Ron Plain, an agricultural economist with University of Missouri Extension, says prices reached $127 per hundredweight in late March, shattering the old record of $105 set in August 2011.

Plain says the high prices are due in part to a falling supply of competing meats. Beef production is down 5 percent from a year ago. But the main factor driving up hog prices is porcine epidemic diarrhea virus.

“Hog slaughter year to date is down 4.4 percent compared to a year ago,” he says. “We’re going to slaughter 5 to 10 million fewer hogs this year because of increased death loss in pigs because of the PED virus.”

However, heavier-weighted hogs going to market have kept pork production from going down too much.

“With 3.3 percent heavier weights per pig, we’re only down 0.9 percent in pork production thus far this year,” Plain says. “Although we expect that will probably get worse as we move through the year, don’t expect a big drop in pork production compared to the decline in hog slaughter.”

The number of PED cases reported by the USDA’s National Animal Health Laboratory Network peaked in February. Since hogs go to market at 6 months of age, expectations are that July and August would be the biggest decline in slaughter, but Plain says that may not be the case.

Plain says the USDA hogs and pigs report “seems to imply a more gradual and even loss across the months. It implies that we won’t see a sharp hole in slaughter because of a huge number of pigs lost in the winter, but rather a more even decline over a longer period of time.”

Plain expects hog prices, which have been around $108 per hundredweight recently, to move higher this summer. He doesn’t think prices will break the March record of $127 per hundredweight, but he does expect prices to reach $120 some time in August before dropping off.

“We’ll probably see a fairly sharp drop-off in hog prices as we move into the fall,” Plain says. “With the warmer weather this spring, the number of new cases of PED virus is down quite a bit.”

A big question is how long sows that have contracted the disease will remain immune.

PED is not fatal for older hogs. Recovered sows can pass on their immunity to baby pigs. If the immunity lasts for the rest of the sow’s life, it would be passed on to her litters and bring PED death losses to almost zero.

But Plain says there are increasing indications that recovered sows will not have lifelong immunity, as some sows have broken a second time with the PED virus.

“If it turns out that that’s the way it is going to be, then several million extra baby pig deaths due to PED may be a number we’ll have to live with again next year,” Plain says.