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Ron Plain

Each July for the past 15 years, I have surveyed agricultural economists who do price forecasting and market analysis to obtain their opinions about the future direction of commodity markets. This year's survey of 19 members of the American Agricultural Economics Association predicts a modest decline in pork production and slightly higher hog prices over the next 17 months.

On average, the group expects commercial pork production during the third quarter of 2003 to be down 2.2% and fourth quarter production to be down 1.5% from last year's level. The rate of decline in production is expected to slow in 2004 with first quarter pork production down 1.2% from a year earlier and second quarter production 0.6% lower than in 2003. The group foresees pork production in the second half of 2004 virtually unchanged from this year with both third and fourth quarter pork production 0.1% lower than this year. For calendar year 2004, they expect commercial pork production to be 0.4% lower than in 2003.

If the group is correct, then 2003 and 2004 pork production will be the second and third highest ever, behind only 2002's total of 19.664 billion pounds.

Survey respondents expect the live price of 51-52% lean barrows and gilts in Iowa/Southern Minnesota to average $42.01/cwt during the current quarter and $38.83 during the fourth quarter of 2003. They estimate the 2003 annual average at $39.60/cwt, which would be $4.69/cwt higher than last year.

The averages of the group's quarterly live barrow and gilt price forecasts for 2004 are $39.98, $44.34, $44.36, and $40.26, respectively, for the first through fourth quarters. The consensus prediction of an annual average price of $42.27/cwt in 2004 is $2.67/cwt higher than the group's price forecast for this year, and slightly above the cost of production for most herds. The most optimistic forecaster in the survey predicted a $46.30/cwt average price for live hogs next year. The most pessimistic forecaster thinks Iowa barrows and gilts will average only $38.50/cwt in 2004.

Most members of the group are forecasting lower feed cost in the coming year. The group's average forecast for the U.S. farm price of corn is $2.12 per bushel for the marketing year beginning on September 1, 2003. Soybean meal is forecast to average close to $160/ton at Decatur during the coming 12 months.