Strong exports fueling hog prices

Strong exports of pork to Russia and Japan could take hog prices even beyond their current record levels, according to analysts in the industry. Pork carcass cut-out values rose $1.69 to $78.32 per hundredweight, the highest level since June 21, 2007.

Exports were up 57% over the previous year in February, the last month for which data was available. Cash hog and pork prices put in a peak somewhere between May and August each year, so the most likely trend is still up. The domestic pork market is quite good, as the product is cheaper than beef at retail presently, so sales are storng.

This, on the surface, looks like good news as far as the eye can see. Usual behavior by pork producers could bring it all crashing down shortly, however. When prices are high and profitable in any commodity, what happens? They plant or produce more of it.

With the ability to produce a litter of piglets every 90 days, you can build hog numbers quick. Cows produce one calf a year. Buffalo are not too fertile and frequently only produce a calf every two years. Numbers tend to stay in balance for a longer period, because of the lead time involved in expansion. No such luck with hogs.

The business is a great deal more volatile as a result. You can count on many more litters of pigs being born, and the females being held back to breed. In less than a year from now, pig numbers could be burdensome again.

Coming from a beef business person, this advice may not have a reputation for veracity. But having competed against pork all my life, I tell you from experience how it is. Watch pig numbers in a year. See if I'm right.