URBANA, Ill. — The pork industry continues to adjust from the supply shock created by the porcine epidemic diarrhea (PED) virus last year. Live prices peaked in the summer of 2014 as PED losses mounted and then fell into the late winter of 2015. Purdue University extension economist Chris Hurt says looking back, it seems prices overshot on the high side due to PED, then undershot early this year as market supplies were restored. The third phase of this cycle now seems to be the recent recovery in prices from their undershooting.

Hurt reported live hog price peaks were near $100 per cwt. in July 2014, then prices fell to as low as about $45 by late March 2015. Now they have recovered to the low $60s. "The low prices in March were clearly related to the 14 percent higher production for that month compared to levels and market concerns the previous year that pork supplies were going to remain higher by 10 percent or more into the spring," Hurt said. "The recent recovery in hog prices apparently is related to the fact that supplies have not been that high.

"April pork production was up 8 percent and May was about 6 percent higher and in alignment with the last inventory count from USDA. If those inventory counts continue to hold, then second-quarter pork production will be up by 6 percent, the third quarter up by 7 percent and the final quarter of the year up only 4 percent."

According to Hurt, lighter marketing weights contributed to the lower-than-expected supplies. Hog producers began marketing at sharply higher weights in the fall of 2013 as feed prices finally started downward. The PED-related losses of baby pigs that fall and into the spring of 2014 served to increase hog prices sharply but also gave affected producers more finishing space.

They used that space to keep hogs on feed for longer periods with the reduced feed prices. In 2013, live weights averaged 276 pounds, but that level increased to 285 pounds in 2014, a 3 percent increase. In mid-April this year, weights dropped below year-previous levels and may average near 1 percent lower for the remainder of the year.

Live hog prices in the first quarter of the year were $48.47, according to USDA. Prices are expected to average near $58 in the second and third quarters, drop to about $51 in the last quarter of the year and decline to the higher $40s for the first quarter of 2016.