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Hog prices fall precipitously optimism weak

Hog prices fall precipitously optimism weak

Hog prices fall precipitously optimism weak

Hog prices fell last week to the lowest point in more than a quarter century and experts predict that the free fall is not over.

"Cash hog prices on November 3 ranged from $15-$19 per hundredweight with the bulk selling in the $18-$19 range," said Lee Meyer, Extension agricultural economist with the University of Kentucky College of Agriculture.

The reason for the low prices is simple: too many hogs, Meyer said.

Slaughter during the week was nearly 2.1 million head, the third highest week ever and only 2,800 below the record set in 1994, he said.

"We've reached the packers' capacity to process hogs. Cooler space, coupled with scarce labor supplies to work the slaughter plants, limits the number of hogs packers can slaughter each day," Meyer said.

Meyer noted that prices are likely to continue to plummet, because of the large number of hogs being sent to slaughter and the inability of slaughter plants to keep up with supplies.

"There are three days coming up in the next eight weeks when packers won't process any hogs - Thanksgiving, Christmas and New Year's. Unless the plants institute a seven-day-a- week slaughter schedule, it is likely that hogs will be backed up through mid-January," Meyer said.

Because of the excess number of hogs being presented for slaughter, packers are bidding lower with each new glut of hogs, he said.

What will the current low prices mean for Kentucky farmers?

Meyer said that cost of production for most Kentucky pork producers is in the upper $30 per hundredweight range. And with Kentucky hog prices last week hovering in the $18 to $21 range, pork producers will be losing money on the hogs they sell until prices improve.

Meyer said, however, that in November of 1994 a similar avalanche of hogs sent to market depressed prices for several weeks, but prices did recover to profitable margins by late January 1995.

However, for the next several months production is likely to stay at historically high levels and even a $10 to $15 per hundredweight price recovery will not be enough to make the industry profitable for farmers. As a result, independent hog producers may decide that they can't stick with the enterprise for the long haul.

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