Released: January 31, 2002

Hog Returns Still Negative, But Turnaround in Sight

MANHATTAN, Kan. – The hog business, like the cattle business, has seen rough times of late, but returns are likely to improve as spring draws nearer, a Kansas State University agricultural economist said.

Returns to labor and management on hogs leaving Kansas segregated early weaning nursery-to-finishing barns averaged a loss of about $12.20 per head for hogs finished in December, said Rodney Jones, with K-State Research and Extension.

The losses were linked primarily to lower cash lean hog prices, which dipped to an average $50.84 per hundredweight [cwt] in the fourth quarter, 2001 in the benchmark Iowa-southern Minnesota market. That was down 5.1 percent from the year-earlier average, and down 26 percent from last summer’s average of $68.96.

Prices are expected to recover slightly, into the mid-$50s this winter, which should somewhat ease the sting of negative margins for producers, Jones said. Further gains may occur this spring.

"Current estimates suggest slightly negative returns to labor and management in January, with improving returns into the spring," the economist said. "Break-even prices to cover all costs for average producers are expected to be in the $41 to $41.50 per cwt range on a live-weight basis [$55 to $56 on carcass-weight basis] for the next few months."

Similarly, declining feed costs have trimmed projected break-even levels to under $42 per cwt on a live basis for farrow-to-finish operations, he added.

"This improvement, coupled with modestly improving hog prices, should return farrow-to-finish producers to modest profitability early in 2002," Jones said.

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News