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U.S. livestock industry faces further downsizing, economist says

CHICAGO, Illinois (Agriculture Online)--Higher production costs and weaker demand, leaving consumers to absorb passed-on costs, could force the livestock industry to further downsize in 2010, says one livestock economist.

John Lawrence, Iowa State University livestock economist, says the harsh reality of cost-of-production remains a hurdle for many producers.

Lawrence addressed a Midwest agricultural conference Tuesday at the Federal Reserve Bank in Chicago.

Specifically, the U.S. recession has cut into beef consumption, a trend that is expected to make a slow recovery, Lawrence says. "Tight supplies, but at times larger than the year before should support prices in 2010," he says. "I see herd liquidation continuing into 2012. This could create turbulent times for the feedlots."

Meanwhile, as hog breeding herds continue to slow, combined with an estimated 0.6% drop in 2010 production vs. a year ago, hog prices are seen going higher in 2010.

However, with $4.00 corn prices, the U.S. hog producer needs a $68.00 per hundredweight, on a carcass basis, to break even.

"Unfortunately, I see hog prices trading around the low $60.00 level in 2010," Lawrence says.

CHICAGO, Illinois (Agriculture Online)--Higher production costs and weaker demand, leaving consumers to absorb passed-on costs, could force the livestock industry to further downsize in 2010, says one livestock economist.

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