Preparing for deep short-term losses

Purdue ag economist Chris Hurt says the pork industry should be prepared for a “tsunami of red ink” in the coming months. 

He says the challenges pork producers are facing – are twofold.  “There are tremendously high prices on the feed side,” he says.  “At this point we’re seeing some contraction – or liquidation – of the breeding herd.”  Hurt says that will add tonnage to the pork supply causing prices to depress somewhat.

Hurt tells Brownfield that combination could lead to record high losses in the pork industry.  “In the fall of 1998, according to my estimates, the pork industry lost about $45.00 per head,” he says.  “Right now, projected corn and hog prices are telling us we could lose about $60.00 a head in the 4^th quarter of 2012.”

But, he says if producers can make it through the short-term – it could pay off.  Hurt says, “What we have is intense short-term losses, very deep losses; but if we can get through it with most of our herd, the industry could to turn to profitability by sometime mid-summer 2013.”

And when profitability returns he says hog prices may even move to record high levels.

AUDIO: Chris Hurt on the pork industry (6:28mp3)