The 2018 outlook early this year was for modest profitability. Now, it has shifted to losses plus higher costs and lost exports as China has implemented a 25% tariff on U.S. pork.
Since the beginning of this year, hog price prospects have increased, but so have anticipated feed costs.
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.