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Prairie Swine Centre is an affiliate of the University of Saskatchewan
Prairie Swine Centre is grateful for the assistance of the George Morris Centre in developing the economics portion of Pork Insight.
Financial support for the Enterprise Model Project and Pork Insight has been provided by:
Hog Market Outlook and Pricing Methods
Posted in: Pork Insight Articles, Production by student on July 20, 2018
Author: Ronald L. Plain
Reference: Banff Pork Seminar Proceedings 2018
Summary:
2018 is the third consecutive year with an outlook of record number of hogs slaughtered, as a result hog prices are likely to average slightly below the breakeven level. Growth in the U.S. ethanol market resulted in increased grain prices between 2006-2013. Increased grain prices resulted in increased financial stress for livestock and pork producers. In 2014 and 2016, feed prices were reduced and PED virus resulted in a reduced hog slaughter. These in combination resulted in record high hog prices.
Using numbers supplied by USDA, hog slaughter will be above 125 million head which is 3% up from 2017. It is expected that both Canada and the U.S. will export a greater amount of pork in 2018.
The Livestock Mandatory Reporting Act of 1999 has the requirement for large packers to provide the USDA with detailed information regarding the hogs they have bought. When purchasing barrows/gilts there are several categories the purchase could be split into:
- Packer sold
- Packer owned
- Negotiated
- Market Formula
- Other market formula
- Other purchase agreement
- Live weight priced
- Non-MPR hogs
Since 2002, there has been a significant decline in negotiated sales, with an increase being with packer owned hogs.
Hog Market Outlook and Pricing Methods