June 11, 2013
Wet corn fields discourage US hog farmers
As wet fields continue to impede planting in parts of the Midwest, US hog producers are losing hope for an early harvest of this year''s expected bumper corn crop, which could lower feed costs sooner rather than later.
"It''s been a long haul," said Iowa hog producer Conley Nelson, who was counting on a timely Midwest harvest after last year''s drought to boost corn supplies and ease prices in the red-hot corn market. "You go into a survivability mode and try to be as efficient as you can."
Iowa leads the nation in corn and hogproduction, harvesting 1.88 billion bushels in 2012, down 20% from 2.36 billion in 2011. It currently has 20.3 million hogs, up 3% from 19.7 million a year earlier.
Demand for corn from last year''s drought-ravaged crop has been intense. Purchases by ethanol plants, livestock producers, corn processors and exporters have made corn remaining from last year''s harvest scarce. The USDA has forecast supplies will reach a 16-year low by the end of the marketing year on August 31, just before harvest starts.
The cash market price of corn in the Midwest ranged from US$7.16 to US$7.56/bushel this week, or US$0.50 to US$0.90 above the Chicago Board of Trade (CBOT) July futures contract. CBOT July corn futures closed Friday (May 31) at US$6.66-1/4 per bushel, about US$0.70 more than a year earlier.
The cash corn market has been on fire all year, with ethanol producers, who use up to 40% of the annual harvest, paying top dollar. Cash prices are expected to go higher this summer as corn supplies get tighter. These historically high prices for corn - the primary feed grain for livestock - are squeezing hog, beef, dairy and poultry farmers the hardest despite very high wholesale and retail meat prices. Iowa State University researchers calculate hog farmers in April, on average, lost US$31.66 for each hog sold, extending their streak of losses to nine months.
To stem the flow of red ink, some producers are feeding hogs less, marketing them at lighter weights and using distillers grains (DDGS), a feed by-product of ethanol production, Nelson said.
Before harvest this autumn there are places in the Midwest where corn will be hard buy at any price "and it could get ugly," Paragon Economics President Steve Meyer told reporters at this week''s World Pork Expo.
Rain-delayed US corn planting, which is the slowest in 17 years, means early harvested supplies are unlikely to be in marketing channels before September, crop specialists say.
The situation for soy, which is crushed into soyoil and the feed additive soymeal, is not getting any better. Several Midwest soy crushing plants have shut early to conduct summer maintenance, citing scarce soy supplies. Other crushers are scheduled to shut down for maintenance in July and plan a longer-than-usual break, Meyer said.
Another Iowa hog producer, Leon Sheets, said farmers were accustomed to minor variations each year in acquiring feed either because crops were planted too late or too early. But the extreme weather and markets in the last year had made planning for worst case scenarios even more challenging.