Rushville Republican

Agriculture

December 14, 2012

Feed, lean hog prices lessen drought’s blow to pork producers

RUSHVILLE — WEST LAFAYETTE - An increase in lean hog prices and a decrease in feed costs have combined to reduce the drought’s effect on the pork industry, a Purdue Extension agricultural economist says.

During the height of the drought, when December corn futures reached $8.49 per bushel and December soybean meal futures reached $540 per ton, markets anticipated heavy liquidation of sows. That feared liquidation dropped December lean hog futures to $70, and producers anticipated per-head losses of $50-$60, Chris Hurt said.

“A panic response might have been to cover substantial amounts of feed needs at record high prices, to forward-price lean hog futures before the outlook worsened or to just sell out altogether,” he said. “Now that the damage from the 2012 drought is better known, those who did not panic are facing much smaller losses than what were feared at the height of the crisis.”

In drought years, feed prices often peak at or just after the height of the drought, then decrease. That trend has continued in 2012, with December corn futures now near $7.40 per bushel and December soybean meal futures closer to $425 per ton.

According to Hurt, a $1-per-bushel reduction in corn prices and a $100-per-ton reduction in soybean meal prices lower hog production costs by about $12 per head.

“Lower feed prices are important to the reduction in anticipated losses, but improved lean hog prices have been even more significant,” he said. “December lean hog futures are currently above $80, which represents at least a $10 increase over drought-induced liquidation fears in early September. A $10 increase in lean hog prices means more than a $20 reduction in anticipated losses.”

The increased lean hog prices combined with lower feed costs have translated into reduced losses of about $30 per head - about 40 percent coming from the lower feed prices and 60 percent from higher lean hog futures, Hurt said.

That’s not to say that sow liquidation didn’t occur. Producers increased sow slaughter in early July and continued that trend through mid-October.

“During this 14-week period, sow slaughter averaged 4 percent higher than for the same weeks of 2011 and likely resulted in a national breeding herd reduction of about 2 percent,” Hurt said. “In the weeks since mid-October, sow slaughter has dropped below previous-year levels as optimism for a much-improved outlook in 2013 was unfolding.”

That optimism might be warranted. Hurt said a return to profitability could come as early as spring. While he estimates losses of about $15 per head will continue through the first quarter of 2013, live-hog prices are expected to reach the break-even point by early May. The second and third quarters of 2013 could bring a return to profitability of about $10 per head.

Lower feed prices could keep the pork industry profitable into fall 2013 and winter 2014, Hurt said.

But even with a projected return to profitability, he warned producers not to be hasty with thoughts of expansion.

“Some producers might want to jump the gun and get expansion started in the spring of 2013. But one glance at the current Drought Monitor tells us that normal crop yields in the U.S. for 2013 are far from assured,” Hurt said. “The uncertainty should keep most producers from expansion fever until the crops are more nearly assured in late-July and August.”

Hurt’s full report, “Pork Producers Did Not Panic” and the accompanying podcast are available via Farmdoc Daily at http://farmdocdaily.illinois.edu/2012/11/pork-producers-did-not-panic.html

– Rushville Republican

 

1
Text Only
Agriculture
  • Farmer ships Vidalia onions ahead of start date SAVANNAH, Ga. (AP) - A major grower of Georgia's famous Vidalia onions said Wednesday he had begun shipping his crop early to supermarkets in defiance of the state agriculture commissioner, who has warned that a new regulation prohibits farmers from

    April 18, 2014

  • Hurt: WASDE report eases fear of low crop prices WEST LAFAYETTE - The U.S. Department of Agriculture's April 9 World Agricultural Supply and Demand Estimates continued a series of recent reports that have offered corn and soybean producers a more optimistic grain-price outlook than what was expecte

    April 18, 2014

  • Seminar to discuss quality forages, quality meat for producers WEST LAFAYETTE - Forage and livestock producers who want to learn about the role forage quality plays in meat quality can attend the Indiana Forage Council seminar. This year's seminar, Quality Forage-Quality Meat, will be held in conjunction with th

    April 11, 2014

  • Purdue Agriculture and Extension events Here is a look at current and upcoming events for Purdue Agriculture and Extension. APRIL 9-16: HARDWOOD LUMBER WORKSHOP The Purdue University Department of Forestry and Natural Resources is offering a workshop for those interested in the hardwood in

    April 11, 2014

  • Ag economist: Baby pig losses greatest in winter months WEST LAFAYETTE -- The impact of the PED virus in swine was felt most strongly during the unusually harsh winter months of December through February, Purdue University agricultural economist Chris Hurt said Monday. He said this means the losses of bab

    April 4, 2014

  • Study reveals farmers' buying preferences, concerns WEST LAFAYETTE -- Agribusiness leaders nationwide can use results from a new Purdue University study to help them become more successful by understanding their farmer customers better. The Large Commercial Producer Survey, conducted every five years

    April 4, 2014

  • USDA extends Milk Income Loss Contract program for 2014 WASHINGTON -- U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Juan M. Garcia today announced the extension of the Milk Income Loss Contract (MILC) program. The extended MILC protects dairy farmers enrolled in the program

    April 4, 2014

  • U.S., South American soybean farmers unite in China ST. LOUIS - Farmers representing countries that produce 90 percent of the world's soybeans recently met with the customers who buy 25 percent of the world's soybeans. As part of the International Soy Growers Alliance (ISGA), leaders from the soy chec

    April 4, 2014

  • Wheat producers need to inspect crop as it breaks dormancy WEST LAFAYETTE - One of Indiana's coldest, snowiest winters in recent history could have damaged some of the state's winter wheat crop - a fact that necessitates field scouting, a Purdue Extension agronomist says. While snow cover insulates winter wh

    March 28, 2014

  • Home gardeners: 'Don't be fooled' by spotty nice weather WEST LAFAYETTE - Planting a home garden at the first sign of spring weather might cause big problems later, especially when more freeze days are likely ahead, a Purdue Extension horticulture specialist says. "Don't be fooled by the odd warm day we wi

    March 28, 2014

Featured Ads
AP Video
SKorea Ferry Toll Hits 156, Search Gets Tougher Video Shows Possible Syrian Gas Attack Cubs Superfans Celebrate Wrigley's 100th Raw: Cattle Truck Overturns in Texas Admirers Flock to Dole During Kansas Homecoming Raw: Erupting Volcanoes in Guatemala and Peru Alibaba IPO Could Be Largest Ever for Tech Firm FBI Joining Probe of Suburban NY 'Swatting' Call U.S. Paratroopers in Poland, Amid Ukraine Crisis US Reviews Clemency for Certain Inmates Raw: Violence Erupts in Rio Near Olympic Venue Raw: Deadly Bombing in Egypt Raw: What's Inside a Commercial Jet Wheel Well Raw: Obama Arrives in Japan for State Visit Raw: Anti-Obama Activists Fight Manila Police Motels Near Disney Fighting Homeless Problem Michigan Man Sees Thanks to 'bionic Eye' S.C. Man Apologizes for Naked Walk in Wal-Mart Chief Mate: Crew Told to Escape After Passengers
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.