USDA Crop Projections: Good News
The U.S.D.A. last week released a 2012/2013 crop year projection for a record 14.27 billion bushels of corn. The U.S.D.A. is predicting farmers will receive $5.00 per bushel in the 2012/2013 crop year. The U.S.D.A. is aggressive in projecting 94 million corn acres to be planted and a yield of 164 bushels per acre. The 14.27 billion bushels projected is 1.2 billion bushels more than the previous record in 2009. Demand for corn will be 13.47 billion bushels with feed usage and exports up while corn for ethanol is expected to decline. Our observations from travelling in other countries are that corn – wheat, etc… plantings and yields will push higher as historically high grain – oilseed prices stimulate production. If the U.S.D.A. is correct at $5.00 a bushel 2012/2013 it’s about $1.00 a bushel lower than in 2011. A $1.00 per bushel decline will drop the cost of production $10.00 per hog. That is definitely increasing hog margin potential. We have been at this game long enough to know that crop projections in February are far from crop in the bin. Weather is the most obvious wildcard between now and November. We believe the U.S.D.A. is correct on the aggressive nature of planting intentions. High grain prices and strong capital position of farmers will lead farmers to plant not only more acres but have the financial wherewithal to push for higher yields. The old saying “surest cure for high prices is high prices” is coming into play.Corn Ethanol
The U.S.D.A. is projecting less corn for ethanol in the coming crop year. It is interesting that reports show a loss of 25 cents per gallon for corn ethanol currently. The major subsidies that back stopped ethanol ended January 1st. What does all of it mean? We don’t know but it appears the Golden Age of the Corn Ethanol industry is over, doubt if new corn ethanol plants will be built, while some small ones might not survive without getting free money from U.S. taxpayers.Hog Markets
Summer lean hog futures reached over $1.00 a pound last week. These are record highs for this market year. The market is bullish. U.S. feeder pig prices continue to be strong with 40 pound feeders reaching $95.00 (average $85.46). The latest U.S.A. – Canada combined swine industry inventory was released last week.United States – Canada
1,000 head
2007 |
2008 |
2009 |
2010 |
2011 |
|
Kept for breeding |
7745 |
7457 |
7182 |
7090 |
7115 |
Market |
74242 |
71872 |
69540 |
69730 |
70836 |
Pig Crop |
37644 |
36521 |
35455 |
35619 |
36437 |
Europe
One of North America’s biggest competitors in the world pork export markets is Europe. The end of year inventories from several European countries is now coming in. The results are striking, high feed prices leading to significant financial losses has lead to major liquidation.By Country – % year over year decline
|
SOWS |
TOTAL PIGS |
CZECH REPUBLIC |
-19% |
-19.4% |
DENMARK |
-3.79% |
0.4% |
GERMANY |
-1.8% |
1.9% |
SPAIN |
-0.2% |
-0.3% |
FRANCE |
-2.5% |
0.2% |
ITALY |
-8.0% |
0.3% |
NETHERLANDS |
-0.7% |
-0.8% |
POLAND |
-15.3% |
-11.6% |
SLOVAKIA |
-4.7% |
-15.6% |
Europe Total (not all countries reporting)
TOTAL SOWS |
-4.7% |
TOTAL PIGS |
-2.4% |
Categorised in: Pork Commentary
This post was written by Genesus