U.S. hog farmers are slaughtering animals at the
fastest pace since 2009 as a surge in feed costs spurs the biggest losses in 14
years, signaling smaller herds next year and a rebound in pork prices.
The 73.3 million hogs processed in eight months
through August were the most in three years, U.S. Department of Agriculture
data show. Pork supply will drop to the lowest per- capita since 1975 next
year, the USDA estimates. Hog futures that fell more than any other commodity
since June 30 may surge 39 percent within 12 months to as high as $1.055 a
pound.
Crop damage from the worst U.S. drought since 1956
sent corn-feed prices surging to a record last month and may mean losses of
about $44 a head for hog farmers in the fourth quarter, the most since 1998,
Purdue University estimates. Two producers in Canada filed bankruptcy petitions
this month. While the acceleration in slaughtering is boosting supply now,
buyers including CKE Inc., the owner of Hardee’s and Carl’s Jr. fast- food
chains, expect higher prices in 2013 as herds shrink and U.S. exports rise.
A pig eats 10 bushels of corn to reach a slaughter
weight of about 270 pounds (122 kilograms), the University of Missouri at
Columbia estimates. Corn futures rose 47 percent since mid- June after the USDA
predicted the drought will cut domestic output by 13 percent. Prices reached a
record $8.49 a bushel in Chicago on Aug. 10.
Producers may receive about $56 per hundredweight
for hogs in the fourth quarter, and the cost of production is estimated at
about $72.29 per hundredweight, said Chris Hurt, an agricultural economist at
Purdue University in West Lafayette, Indiana. That means farmers may earn about
$151.20 for a 270- pound hog that cost about $195.18 to produce.