Economists Forecast Hog Prices Following USDA Quarterly Report

( Farm Journal's PORK/Zoom )

Agricultural economists shared their forecast prices for the next several quarters following the Sept. 24 announcement of the September 2020 Quarterly Hogs and Pigs Report in a teleconference funded by the Pork Checkoff.

Ron Plain, University of Missouri-Columbia

Using the Iowa-Minnesota carcass prices negotiated, Ron Plain, professor emeritus at the University of Missouri-Columbia, estimated $56 per cwt. for fourth quarter 2020, $57 for first quarter 2021, $62 for second quarter 2021, $60 for third quarter 2021 and $51 for fourth quarter 2021. 

Len Steiner, Steiner Consulting

Len Steiner, president of Steiner Consulting in Merrimack, N.H., used the CME Lean Value Index to quote his prices. He said fourth quarter 2020 is going to be an “oddball,” but it will be good for producers. He forecasts 2021 will have better prices for producers and hopefully slow the number of people exiting the industry at this point in time, he said. He quoted third quarter 2020 at $55.27 per cwt. and fourth quarter 2020 at $66.67. For 2021, he quoted $68.67 per cwt. for first quarter, $75.67 for second quarter, $73.33 for third quarter and $61.67 for fourth quarter. His average for 2020 is $59.04 and $69.83 for 2021.

Kevin Bost, Procurement Strategies

Also using the CME Lean Value Index, Kevin Bost, president of Procurement Strategies in Elgin, Ill., quoted similar prices to Steiner. For fourth quarter 2020, he estimates $68. For first quarter 2021, he predicts $68 and for second quarter 2021, $78.

Plain emphasized that there is an enormous amount of uncertainty in prices and how many hogs are out there now. Not to mention, uncertainty remains in packers’ capacity and ability to process pigs on a timely basis.

“There’s a lot of risk out there. I don’t recommend hedging all that,” Plain said. “With the uncertainty we’ve had in the markets and the fluctuation, look at pricing some of your pork production off of the futures market – it’s been a good strategy for a couple years now and it may still be the case going forward.”

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