Agri News, MN
01-23-07
Lawrence says hog producers are challenged by high corn prices
By Stephanie Corbin
Agri News staff writer
MINNEAPOLIS -- Corn price has an impact on hog price.
It's an old adage in the hog industry, said John Lawrence, an Iowa State
University Extension Livestock Economist at the 2007 Minnesota Pork
Congress while talking about the industry's outlook.
"The question is do high corn prices lead to high hog prices," he said. In
analyzing previous years with high corn prices, two quarters later, the hog price
still remained low.
"Do hog prices adjust to corn prices," Lawrence asked. "Yes, in a year and a
half."
He said the reason for the adjustment usually is that livestock producers leave
the pork industry because of various price factors.
"I think weights are going to moderate," Lawrence said of the hogs in the
industry. He anticipates 2 percent more pork on the market in 2007 than in 2006.
"I think 2008 will be lower than 2007 unless we see something else in the corn
market," Lawrence said.
He said dry distiller's grains might be substituted because of their higher protein,
fat and fiber content than corn.
"I encourage you to learn as much about it as possible," Lawrence said.
He said hogs can't utilize DDGs as well as dairy and beef cattle.
"The cost of feeding hogs is getting higher," Lawrence said.
The long-term implication of higher livestock feed costs is with consumers, he
said. The pork price will increase more rapidly than the beef price.
A weight adjustment throughout the industry would help. Lawrence said prices
could increase 3 percent for a 1 percent decrease in supply of pork. Producers
need a $7.50 to $10 increase per hundredweight of hogs to offset the higher corn
prices.
"Bottom line, I think we're looking at lower prices," Lawrence said.