Market volatility is hitting livestock producers while their input costs have climbed. Bernt Nelson, an economist with the American Farm Bureau Federation, says prices were much higher last year before dropping off in the first quarter of 2023.
Nelson; “The input costs, demand, and supply really combined to give us a different situation here. Profitability started to deplete when we saw prices dropping in hogs. Prices really rallied high last year. In fact, we saw some record cash offerings put out for hogs. Now, as we look forward in 2023 and especially for the first quarter, price has really dropped off. Input costs, feeds, labor, infrastructure, and things of that nature have stayed really high comparatively, and so profitability really fell out of the hog market for the first quarter.”
He says the hog market can change dramatically, and we’ve already seen big shifts take place; “We looked at markets Tuesday and we saw a limit-up move in lean hogs, especially in July futures. Really at the drop of a dime, we went through a very bearish market situation to a very bullish market situation. Cash traded a lot higher. Not just a little higher, but dramatically higher. The national average hog price was up $11.50, and it’s expected to continue follow through.”
Nelson said he’s expecting prices to move higher in the months ahead, thanks to a few key factors.
He says; “The global pork supply is much tighter, and demand from other countries like China is starting to pick up. All meat supplies are getting tighter, globally. We have avian influenza affecting the poultry industry. We have tighter supplies in beef from the ongoing drought scenarios, and high input costs. And we’re still seeing some drought linger on, especially in the Corn Belt region, and tighter global supplies in the pork market due to African swine fever and declining overall inventories.