December corn lost 53.5 cents a bushel last week closing Friday at $6.38.  It is good to see it going down when not so long ago corn was $7.79 and there were some speculators chirping that it might go to $12.00 a bushel. Of course part of the price slippage is due to the general negative news that have dominated the global economic news. Not sure how relevant the reports we are getting, but early indicators from the U.S, harvest is many are finding 20 more bushels of corn per acre than they expected.  A Bigger corn crop then expected is only good news for hog producers. While corn was down October Lean hog futures gained $1.45 a pound for the week. The combination of corn down 53 cents a bushel and hogs up $1.45 a pound improved hog margins about $8.00 per head. *You can see the improvement in Hog Margins in the livestock margin that DTN Ag data does daily.  Not so long ago it projected you could pay $30 for a 45 pound feeder pig.  Last Friday it projected $50.78.  That is a $20 improvement per head. *Pork demand is strong.  Last week the U.S. marketed almost 2.3 million hogs. That is 100,000 more than the same week last year despite the greater number of hogs per week.  The lean hog price is $7.00 per hundred higher than a year ago with U.S.D.A.  U.S. pork cut outs at $97.84 an unprecedented high price with hog numbers at 2.3 million per week.  Fantastic demand from pork exports will continue to support hog prices throughout the fall. *Pork demand will be further aided in the coming weeks as chicken marketing’s drop about 5 -7% year over year or about 10 million less chickens a week. Less chicken should support their own prices but also help pork. *the U.S. September Cattle on feed Report released last Friday is being called bullish.  1% less cattle than a year ago surprised the trade which was expecting 1% more.  This should push cattle prices up which should also pull hogs along.

Tough Times

            It’s not easy to be a hog producer.  Feed prices have been at unprecedented levels and then throw in the fear of even higher feed prices it makes it even harder.  We get a sense of little optimism in the hog industry.  A sense that many feel marooned in the hog industry with little opportunity to escape.  We have as an industry in the last few years had to deal with negative margins, high feed prices, H1N1 (swine flu), animal welfare, environmental, corn ethanol, etc…  It appears we have not got many breaks.  The bright spot is pork demand has been strong domestically and globally. This has allowed lean hog prices to reach and exceed $1.00 lean per pound.  We expect much of the same in prices in the next twelve months.  As hog producers we are producing a product that domestically and globally people are voting with their money that they want.  That in itself is an underlying strength that we have in our business.  No choice, no exit strategy, best we stay focused on maintaining our position as the Number One choice of protein consumers in the world.

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This post was written by Genesus