Wet corn fields dampen U.S. hog farmers' hopes for cheap feed

Fri Jun 7, 2013 6:57pm EDT
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By Theopolis Waters

DES MOINES, June 7 (Reuters) - U.S. 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, as wet fields continue to impede planting in parts of the Midwest, producers and analysts at a pork industry meeting here said on Friday.

"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 hog production, harvesting 1.88 billion bushels in 2012, down 20 percent from 2.36 billion in 2011. It currently has 20.3 million hogs, up 3 percent 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 U.S. Department of Agriculture has forecast supplies will reach a 16-year low by the end of the marketing year on Aug. 31, just before harvest starts.

The cash market price of corn in the Midwest ranged from $7.16 to $7.56 per bushel this week, or 50 to 90 cents above the Chicago Board of Trade July futures contract. CBOT July corn futures closed Friday at $6.66-1/4 per bushel, about 70 cents more than a year earlier.

The cash corn market has been on fire all year, with ethanol producers, who use up to 40 percent 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 feedgrain 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 $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.   Continued...