Forecasts for a slight increase in production and a modest slowdown in pork export growth haven't dampened prospects for continued pork profitability, says a veteran hog economist.

“The latest USDA Hogs and Pigs Report was basically neutral with slightly higher breeding herd numbers,” reports Glenn Grimes, a University of Missouri Extension livestock marketing analyst.

The U.S. inventory of all hogs and pigs on Sept. 1, 2006 was 62.7 million head, up 1% from a year ago and up 2% from June 2006. The breeding herd inventory, at 6.08 million head, climbed 2% from last year and was slightly higher than the previous quarter.

That 2% increase in the breeding herd equated to 107,000 animals, according to Chris Hurt, Purdue University Extension marketing specialist.

“Somewhat surprisingly, 65,000 of those animals are in the eastern Corn Belt states, with Indiana's breeding herd up 30,000 head, Illinois up 20,000, Ohio up 10,000 and Wisconsin up 5,000,” says Hurt. Expansion in the Plains included South Dakota, up 15,000; and both Colorado and Kansas, up 10,000.

Missouri increased breeding animals by 15,000, while Minnesota dropped 5,000 and Iowa was unchanged.

Grimes provided price predictions during a Pork Checkoff-funded news conference. For 51 to 52% lean hogs, Grimes forecasts prices at $44-48/cwt. for the final quarter of '06, and to average near $50/cwt. through mid-2007.

Exports will support those prices, but not to the extent of the past three years, Grimes and Hurt agree.

Pork exports are expected to reach 3 billion lb. or about 14% of domestic production in 2006. Exports are projected to increase just 4% in 2007.

“This is a sharp slowdown from 2003-2006 when exports expanded by a compound annual rate of 21%,” says Hurt. “The major question will be if Asian pork purchases will hold up with U.S. beef once again flowing.”

As to the role of ethanol, Grimes says the rule of thumb is each 50-cent hike in corn prices raises the cost of production about $2.50/cwt. “If we see $3 corn, this will add about $5/cwt. to the cost of pork production compared to the last 12 months,” he says.