SIOUX CENTER, Iowa (KTIV) -- After nearly two years of losing money in the market, the outlook is finally improving for pork producers. They've weathered the US and global recession, record hog supplies and even the loss of exports due to H1N1.
"We're making some money again," says Sioux Center pork producer Gary Den Herder.
It's a welcome sign for pork producers like Gary Den Herder who spent the last 18 to 24 months watching the equity in his operation waste away with record low hog prices.
"It's definitely picked up, its more profitable now and we hope it continues," Den Herder says.
Hog prices have risen substantially since just the first of the year. And futures prices look strong through the rest of 2010.
"The summer months right now are suggesting that we're going to be in the low 60s on a live weight, live basis, compared to six, seven, eight weeks ago we were in the mid-30s," says Brad Kooima of Kooima & Kaemingk.
The number of hogs has declined as producers sold off, or sold their herds, which is driving the higher prices.
Koomia says, "So yes, year to date slaughter is six percent less than a year ago. So we have less hogs."
"Most of its due to attrition, guys just couldn't take it any more," says Marv Rietema of Value Added Pork.
Not only are hog producers seeing the benefits of higher hog prices, they're also seeing better break-evens because of lower corn and feed prices.
Rietema says, "Our feed costs have gone down and that's helped us a lot."
"Everything is starting to get back into balance from the high prices corn that we had in the past," Den Herder said.
The other factor helping to boost the hog market is the recent reopening of key export markets, like China and Russia. Commodity broker Brad Kooima says while actual sales to China may not come for a while, Russia is a different story.
"Russia on the other hand has probably holds out some short term hope. We hear that there is already some business being done to Russia," Kooima said.
Kooima says with the resumption of exports and an improving US and global economy, he's optimistic about the hog market now and in the future.
Kooima says, "These guys deserve it. They've been to the wood shed and back."
Another key for keeping hog prices strong will be keeping US consumer demand going. Consumers are already starting to see some higher prices for pork in the grocery store and with unemployment at record levels if those prices get too high, that may curb their spending.