The good news is that a breeding herd expansion of about 1% is sustainable.
Pork producers are watching the weather forecast almost as intently as crop producers. Current feed prices are already high enough to turn the 2018 outlook into expectations for losses.
For agricultural commodities, larger supplies generally result in lower prices. This year's hog market is going against that adage with both larger supplies and higher prices.
Hog prices are expected to increase in 2017 even with 3% more pork production.
The pork industry outlook has experienced a major shift to the upside.
The latest Hogs and Pigs report released on December 23 indicated that pork supplies in 2017 will be larger than prereport expectations.
This fall, prices for wheat, corn, and lean hogs fell to 10-year lows. Unfortunately, costs of production are not at 10-year lows.
Some are saying this is the most volatile cattle market ever, but an evaluation of that statement would take considerable number crunching.
There is worry that more hogs are headed to market this fall than available packing capacity, and the latest USDA inventory indicates there are more hogs than had been anticipated.
Producers of beef and pork have generally been discouraged about recent low prices as cash prices have dropped sharply this year. Spring finished cattle price highs were near $138 per live hundredweight but last week had fallen to $115, a $23 plunge.