American Agriculturist, PA
04-03-07
Hog Profit Outlook Improved By Planting Intentions
Hog producers can look forward to profitability if 2007 corn acreage is expanded
as much as USDA's March 30 Planting Intentions survey indicates. That's the
word from swine industry economists after analyzing last week's USDA Hogs and
Pigs Report and the planting intentions report.
An anticipated 15% increase in U.S. corn acreage this year, if realized by actual
plantings, could take some of the pressure off of feed costs and continue a
record stretch of profitability for hog producers, says Shane Ellis, an Iowa State
University livestock economist. "If the weather is good for spring planting and
for the growing season, we'll see livestock producers stay profitable," he says.
USDA's quarterly Hogs and Pigs Report released March 30 shows that on March
1 there were 16.6 million hogs and pigs on Iowa farms, a 1% increase from a
year earlier. Nationally, the inventory of hogs and pigs on March 1 totaled 61.1
million, up 1% from March 2006.
Hogs profitable for last 37 months
According to records kept by ISU economists, Iowa hog producers have made a
profit on hogs sold for 37 consecutive months, says Ellis. That's the longest run
of monthly hog profits in history.
One question that still hangs over hog producers is how much more of the extra
corn grown in 2007 will be available for livestock production. "There are
forecasters who say ethanol and other industrial uses will eat up the production
from the increased corn acres," notes Ellis. "But producing more corn sure isn't
going to hurt the livestock industry."
The planting intentions report indicates corn acres will increase 15% nationally
and 10% in Iowa. That will lead to lower corn prices in the short term but actual
plantings and weather hold the key for potential corn prices. Economists point out
that livestock producers might want to use the recent downward move in corn
prices to lock in at least part of their future feed needs. Economists think corn
stocks will still be pretty tight going into 2008, because of the continuing increase
in ethanol demand, livestock feeding and exports.
Hogs to stay profitable into summer
Some hog price pressure may be coming because the USDA Hogs and Pigs
Report shows more hogs will go to market in May than had been expected.
However, the number of hogs marketed in the second and third quarters of 2007
will be lower than expected, according to the report.
Dan Vaught, a livestock industry analyst with A.G. Edwards in St. Louis says he
thinks high feed costs in the past six months have caused hog producers to cut
corners on their feeding of sows. That would mean a drop in litter size. "We're
looking at summer production to be below what we had been expecting and that
will be supportive for hog prices in the future," he says.
Thus, the stage is set for hog producers to earn a profit through this spring and
into summer. What about cattle feeding?
Break-even prices for cattle feeding depends on what part of the country you are
in, he says. There have been different weather problems in different parts of the
United States. If there have been no weather problems, cattle producers will be
able to make some money. Downward pressure on corn prices would be good for
both hogs and cattle because it will lower feed costs.