URBANA, Ill. — There’s some good news for a change in the pork industry. Todd Gleason has more on the better prices with Purdue Extension Economist Chris Hurt.
Chris Hurt: Hey some good news for a change. Pork producers are pleased to see prices higher than earlier expectations.
This comes after a really tough year, says Purdue’s Chris Hurt, that bottomed out in November with prices dropping to about $32 for a hundredweight. That’s like paying 32 cents a pound for your pork chop and your bacon – at least at the wholesale price. Now things are way better says the ag economist.
Hurt: Recently live prices have reached the mid-$50 and have pulled the industry out of deep losses into profitability.
The leading reason for the better on farm price is actually lower pork prices at the grocery store. The “law of demand” says people will buy more when prices are lower, and retail pork prices… have been lower say Chris Hurt.
Hurt: Retail pork prices peaked in 2014 because of reduced supplies due to the PED virus and have generally been falling since 2015. In the final quarter of 2016, retail pork prices dropped 26 cents per pound from the same period one year earlier. The downward movement continued in January of this year with retail pork prices down 22 cents per pound from one year earlier.
An additional issue contributing to the extremely low prices for pork producers last fall was the small portion of the retail dollar getting back to producers. Another way of saying this is that the margins for the processors and retailers remained substantially higher than normal. As a result, the portion of the retail pork dollar that got back to the producer dropped to 17.5 percent. This was lower than the previous record low of 18.4 percent in the financially tragic final quarter of 1998. As for the rest of 2017, Hurt thinks there is room for even lower retail prices and a higher percentage of that price getting back to the hog producer.
— Chris Hurt, Agricultural Economist – Purdue University Extension and Todd E. Gleason, Farm Broadcaster
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