Purdue Economist Advises Being Conservative and Defensive

Pork producers need to concentrate on survival in 2009.

The extreme uncertainty of the moment implies that pork producers, like all of agriculture, should be conservative and defensive according to Purdue University's Chris Hurt. Hurt says perhaps management decisions in 2009 should be focused on increasing odds of survival, rather than looking for big opportunities.

Patience could be about to pay off as Hurt believes pork producers may be on the verge of returning to profitability. Losses date back to October 2007. Hurt says, in response to concerns of slowing world economic activity - hog prices are expected to rise seasonally in coming months – as feed costs continue to drop. Hurt points to average live-hog prices around $47.50 per hundredweight, but expected production costs near $45.50, which would provide a modest profit.

Hurt predicts that hog prices will not see much enhancement this year due to reductions in demand, particularly export demand. USDA expects a 14% drop. Domestic pork production is also expected to drop – maybe 1-2% this year. This indicates pork supplies available to U.S. consumers will rise modestly for the year. Pork available per person is expected to rise by as much as 6% in the second quarter.

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