Des Moines Register
03-31-07
Hog market profitability stretches to 37th month
If feed prices stay low, potential exists for more good times, one expert says.
By JERRY PERKINS
REGISTER FARM EDITOR
Hog producers can look forward to letting the good times roll, swine industry
analysts said Friday.
The analysts said the anticipated 15 percent increase in corn acreage - if realized
by actual plantings - could take some of the pressure off feed costs and continue
a record run of profits for pork producers.
The U.S. Department of Agriculture's quarterly hogs and pigs report released
Friday showed that, on March 1, there were 16.6 million hogs and pigs on Iowa
farms, a 1 percent increase from a year ago.
Nationally, the inventory of hogs and pigs on March 1 totaled 61.1 million, up 1
percent from March 1 a year ago.
Shane Ellis, Iowa State University Extension economist, said the potential
increase in corn acres this year will make for lower corn prices and lower feed
costs.
"If the weather holds out, and we have a bigger corn crop, we'll see livestock
producers stay profitable," Ellis said.
Iowa hog producers have made a profit on every hog sold for 37 consecutive
months, Ellis said. That's the longest run of monthly hog profits in history.
One question that hangs over the market, Ellis said, is how much more of the
extra corn will be available for livestock production.
"There are forecasters who say ethanol and other industrial uses will eat up the
increased corn acres, but producing more corn sure isn't going to hurt," he said.
Other livestock industry analysts agreed with Ellis that the Agriculture
Department planting intentions report will drive corn prices down and help reduce
feed costs for hog producers.
James Mintert, Extension livestock marketing specialist at Kansas State
University, said the report will lead to lower corn prices in the short-term, but
actual plantings and weather hold the key to potential corn prices.
"Livestock producers in general and hog producers in particular got some good
news," he said, with the higher-than-expected corn acreage estimate released by
the Agriculture Department.
Livestock producers might want to use the downward move in corn prices to lock
in at least part of the future feed needs, he said.
"I think we still have the possibility of pretty tight (corn) stocks going into 2008,"
Mintert said.
Darrell Mark, Extension livestock marketing specialist at the University of
Nebraska, said there might be some price pressure in the coming months
because the Agriculture Department hogs and pigs report showed more hogs will
go to market in May than had been expected.
However, he said, the number of hogs marketed in the second and third quarters
will be lower than expected, according to the report.
Dan Vaught, livestock analyst with A.G. Edwards in St. Louis, said he thought
high feed costs in the past six months have caused hog producers to cut corners
on their feeding of sows.
A drop in pig litter size - and thus, production - was a consequence.
"We're looking at summer production to be below what we had been expecting,
and that will be supportive for future prices," he said.
Mintert said the stage is set for hog producers to earn a profit through this spring
and into summer.
On the cattle side of the market, Mintert said, a wild card will be slaughter cattle
prices, which have been improving for cattle feeders.
Break-even prices for cattle feeders depend on what part of the country they are
in, he said.
"They're all over the map because of different weather problems that have
occurred in different parts of the country," Mintert said. "If there have been no
weather problems for cattle producers, then they could make money."
Downward pressure on corn prices could be good for both hogs and cattle, he
said, because it will lower feed costs.
Farm Editor Jerry Perkins can be reached at (515) 284-8456 or
jperkins@dmreg.com