Iowa Farmer Today
05-05-07
Hog demand looks good
By Jeff DeYoung, Iowa Farmer Today
Strong domestic and export demand should help keep hog producers profitable
through the coming weeks.
Shane Ellis, Iowa State University Extension livestock marketing
economist, says prices should range from $73-$78 on a lean basis into summer.
“The futures market is lending quite a bit of support to prices, so it looks pretty
good,” he says. “And, even though feed costs have increased, profit margins
have remained the same because of the strong prices.”
Because corn prices have moderated some in recent weeks, Ellis says there may
not be a huge need for producers to lock in feed needs. He says heavy rains last
week slowed farmers, but hot, dry weather over the weekend should get planters
moving this week.
“I would never say it’s a bad idea to lock in a profit, but right now, I think you’re
OK with corn prices,” he says. “But, I would also advise you to have a plan in
place in case something dramatic happens.
“Right now, things look pretty optimistic. I would never let greed get a hold of you
to the point where you may not make a profit.”
Fed cattle prices remain strong as prices remain in the high-$90s, Ellis says.
He adds after the market hit $100 per hundredweight a couple of weeks ago,
current trends resemble the last time prices went that high.
“The last time this happened was the fall of 2003, and the trends are following
pretty closely to that. Demand is strong, and slaughter numbers are down, even
though production has been a little higher because of heaver slaughter weights.”
Ellis believes the market has probably peaked, even though there could be a
couple more occurrences of $100 cattle.
“We’re coming up on Memorial Day weekend, and prices will generally trend
higher as that approaches. After that, we usually see prices soften somewhat,
but I still expect them to be very good.”
Lower corn prices have resulted in increased optimism between cattle feeders
and cow/calf producers.
“Those feeder cattle prices are tied pretty closely to what the fed cattle market is
doing, and the feedlots can look at corn prices at $3.50 and are able to Pay more
for those calves,” Ellis says.
“Barring a major problem with corn prices, I can see feeder cattle prices
remaining fairly strong for at least another year.”