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Hog profits to make big return

07/09/2013 @ 9:45am

A record-large drop could occur in the cost of producing hogs in the U.S. by the final quarter of this year compared with the second quarter, says Chris Hurt, agricultural economist at Purdue University.

Based on current predictions for a huge corn crop and improved soybean production in the U.S. this year versus the drought-reduced output in 2012, Mr. Hurt predicts corn prices could drop $2 a bushel by harvest time and soybean meal prices could be $130 per ton lower, compared with prices now.

The lower corn and soybean meal prices could reduce the cost of producing hogs by about $13 per hundredweight on a live basis to $56 by the final quarter versus around $69 in the second quarter. That would be the largest drop on record for that time frame, Mr. Hurt said in his latest market outlook report released Monday afternoon. "There are still unknowns about acreage, weather for the remainder of the growing season, and early frost," that could affect grain production and prices, Mr. Hurt said.

Profits of $16 per head are predicted for the last half of 2013 and first half of 2014 compared with losses of about $21 per head during the previous 12 months, Mr. Hurt said. The prospects for cheaper feed costs and improved profitability could result in modest expansion of the swine herd late this summer and during the fall.

Write to Curt Thacker at curt.thacker@dowjones.com

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(END) Dow Jones Newswires

July 09, 2013 07:51 ET (11:51 GMT)

DJ Record-Large Drop Seen in Cost to Produce U.S. Hogs By 4Q vs 2Q->copyright

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