An agricultural economist with the University of Missouri expects record U.S. corn production to result in greatly improved profitability for North American pork producers.
The typical summer peak in live hog prices combined with some relief on the feed cost side has pushed the majority of North American pork producers back into the black.
Dr. Ron Plain, an agricultural economics professor with the University of Missouri, says if USDA is correct American farmers will harvest their first 14 billion bushel corn crop this fall, about a billion bushels above the old record.
As you know most of the diet for hogs is corn and soybean meal and corn and soybean prices have been record high in the past 12 months.
A severe drought here in the United States in 2012 really drove prices up and high feed costs make for high break even prices and a lot of red ink for hog producers.
Corn farmers responded.
We’ve planted more acres of corn in the United States than any year since 1937 and it looks like we’re about to harvest a record corn crop.
USDA is forecasting the biggest year to year decline in corn prices ever.
They’re expecting prices to average under five dollars a bushel for this fall harvest so that’s going to bring down the cost of production for hogs, probably 15 dollars per hundred pounds of live weight.
That’ll be 40 dollars a head or so lower feed costs for this coming year and that should get us into a situation where we’re likely to string together 12 months, maybe 14 or 15 consecutive months of profits.
Dr. Plain suggest the big factor to be watching will be how the livestock and poultry industries respond.
He says if meat and poultry production expand we might see meat supplies growing as fast as feed costs decline.
