Hog prices are expected to stay strong – just not in the upper $50s as some had hoped, says Chris Hurt, Purdue University Extension marketing specialist.

“Some had feared that the recent drop in prices was a sign that the ‘big break’ in hog prices had begun,” he says. “That is not likely to happen.”

In recent days, hog futures prices have seen the first slip in what has been a bullish market. Cash prices have followed that drop, raising questions whether live hog prices can hold on. Despite just 1% fewer hogs going to market in 2005, prices have averaged about $52.60, 10% above the same period last year, says Hurt.

“Such strong performance in light of unchanged supplies reveals the continued strength of pork demand,” he notes. “The demand components this year include: strong pork exports given continued limits on U.S. beef exports; shifts to pork consumption due to record-high beef prices; narrow pork margins; and favorable consumer incomes and attitudes regarding meat consumption.”

Pork supplies for the rest of the year are expected to exceed 2004 production by 1%. “While this is not a major deterrent to continued high hog prices, it does cast a possible bearish shadow, at least from the level of $80 summer futures prices,” states Hurt. “A second supply concern is that breeding herd expansion is likely to be revealed in the USDA’s June Hogs and Pigs report to be released June 24.”

Hurt observes that the best evidence of expansion comes from the low rate of sow slaughter since last December, down about 8% vs. the same period a year earlier. The March report showed no signs of a breeding herd buildup, but a 1-2% increase appears possible for the June update.

Canadian imports of market hogs are down about 20%, and imports of pigs for finishing are down about 12%. “Given the strength of the Canadian dollar, the flow of pigs coming from Canada is expected to remain below year-previous levels, another supply fundamental that does not favor a major break in hog prices,” adds Hurt.

A number of positive factors point to continued profitable hog prices in 2005. Live hog prices should average in the mid-$50 for the second quarter and drop into the lower $50s for the third quarter.