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US hog prices not to repeat 1998 collpase - USDA
September 03, 2002 1:05:00 PM ET
WASHINGTON, Sept 3 (Reuters) - Despite plummeting prices in U.S. livestock markets, the hog industry will not see a repeat of 1998 when overabundant supplies drove prices to a 50-year low of around $10 per hundred pounds, a U.S. Agriculture Department official said on Tuesday.
USDA's Chief Economist Keith Collins said producers last week killed two million hogs for the first time this year, pressuring prices to fall to around $20 per hundred pounds.
"Whenever we get up to killing two million head a week. that puts a lot of downward pressure on prices," Collins told reporters. "However, the department has not been expecting a collapse in hog prices the way we saw in 1998."
Collins said the USDA was still forecasting hog prices for farmers in the 2002 fourth quarter would average "up in the high $20 range."
A prolonged drought in the U.S. Plains has parched crops and forced many ranchers to take their livestock to slaughter earlier than planned. Producers have watched losses pile up as an abundance of beef, pork and chicken clog U.S. markets.
At the end of July, stocks of frozen pork in U.S. warehouses totaled 473.9 million pounds, well above the 339.5 million lbs in cold storage a year earlier, USDA said.
On Tuesday, Chicago Mercantile Exchange lean hog futures were sharply lower in early trading. CME hogs for October delivery were off 0.925 cent at 29.950 cents per pound.
Collins said the department was closely monitoring the livestock markets.
Last week, Gov. Tom Vilsack of Iowa, one of the largest hog producing states, advised producers to sell hogs now rather than create an avalanche this fall that could bury prices.
Last month, Smithfield Foods Inc. (SFD), the nation's biggest hog producer, reported a nearly 80 percent drop in quarterly profits due to low hog prices
