Large pork supplies, rising costs and potential trade retaliation from both Mexico and China continue to cast a shadow over the pork industry.
Purdue University agricultural economist Chris Hurt said losses will be small this summer, but losses of more than $25 per head are estimated for the last quarter of 2018 and first quarter of 2019.
"Production so far this year is up nearly 4 percent with the number of head coming to market about 3 percent higher and weights up near 1 percent," Hurt said. "Domestic demand and export demand have been good this year but not strong enough to offset the higher supplies. As a result, live hog prices have been down 3 percent."
In the January to May period of 2017, the live hog price for 51 to 52 percent lean carcasses averaged $48.74. This year, the price was about $1.75 lower, around $47.
Trade concerns continue, Hurt adds, but exports have remained favorable in the data available so far this year, which shows pork exports growing by almost 6 percent.
Looking forward, Hurt said that pork supplies are expected to continue to be 4 percent higher for the rest of the year and may moderate to a growth rate of about 3 percent next winter. Hog prices are expected to average near $50 in the second quarter this year, in the low $50s in the third quarter and around $43 in the final quarter. That will provide an annual 2018 price of $48 compared to $50.50 last year.
Costs are expected to rise as well in 2018 in terms of labor, interest, fuel, machinery and feed. Soybean meal prices at Decatur averaged $315 a ton in 2017, but are expected to be around $375 a ton in 2018. Higher corn prices also will drive costs higher especially for the 2018-19 marketing year.
Losses for average cost farrow-to-finish operations are estimated to be $8 per head in the second quarter of 2018 and $3 per head in the third quarter. Then losses explode to an estimated $29 per head in the last quarter of 2018 and $24 per head in the first quarter of 2019.
The use of high-fiber feed ingredients in swine diets is on the rise due to their wide availability and relatively low cost, but because pigs lack enzymes needed to digest dietary fiber, the energy available to pigs from these ingredients is less than lower-fiber ingredients.
Researchers at the University of Illinois are helping to determine the contribution that high-fiber feed ingredients make to the energy content of swine diets.
Hans Stein, a professor in the Department of Animal Sciences at U of I. hypothesized that different inclusion rates of high-fiber ingredients in diets fed to pigs might result in different values for digestible and metabolizable energy.
Stein and fellow researchers tested 10 diets fed to growing pigs formulated by adding either 15 or 30 percent canola meal, corn germ meal, sugar beet pulp or wheat middlings to a basal diet consisting of corn, soybean meal and cornstarch.
The inclusion rate of any of the high-fiber ingredients did not affect the digestibility of energy or the concentration of digestible and metabolizable energy derived from the nutrients themselves. In other words, each ingredients was digested as efficiently when it was included at 30 percent as it was when it was included at 15 percent.
"Based on these results, we can say that the ability of pigs to ferment fiber in the hindgut is not affected by inclusion of high fiber ingredients up to 30 percent," Stein said. "The decrease in energy utilization when high fiber ingredients are fed is most likely due to reduction in digestibility of other nutrients due to faster passage through the digestive tract."