What can happen to prices of agricultural commodities in a decade, and why look at the last decade? It is because it was 10 years ago in the fall of 2006 that agricultural commodity prices began to head upward in what can be described as a boom/moderation price cycle.

Hog prices have collapsed to levels far below breakeven. There is worry that there are more hogs headed to market this fall than available packing capacity, and the latest USDA inventory indicates there are more hogs than had been anticipated.

The longer-term economic implications of Brexit may be the most important and could reduce the rate of world economic growth. If Brexit does slow world income growth, that could be negative for global sales of pork and other U.S. agricultural products.​​

Two important factors determining margins this year are the potential for higher pork exports and thus higher hog prices and the potential for higher feed prices. These are tugging at margins in opposite directions.

The nation’s pork producers have indicated to USDA that they are not expanding the breeding herd and, in fact, intend to reduce farrowings this spring and summer. This means pork supplies will be somewhat less than had been anticipated and that hog prices will be somewhat higher.

The outlook for the pork industry has turned somewhat more optimistic in recent weeks. The sources of that optimism include a $2 to $4 increase in spring and summer lean hog futures prices since the first of the year and slightly lower new-crop soybean meal prices. A bit higher hog prices and a little lower cost add to the potential for a profitable year.