What is in this article?:
• For the 2013/14 corn marketing year, hogs are offering an estimated $6.85 per bushel if the profits from hog production are assigned to the value of corn.
Peak of 2012 drought
In the peak of the 2012 drought, hog production costs were near $73 in the third quarter of 2012. Those have dropped to about $56 for the coming year.
While selling corn at $6.85 per bushel is appealing to cash grain farmers, it is important for them to recognize that the high feed prices resulting from the 2012 drought caused large losses.
In the current profitable period, it will take until June of 2014 to recover the losses that were suffered from drought- induced high feed costs.
After many years of often high and very volatile feed prices, the future appears brighter for all of the animal species with feed prices moderating over coming years. With moderation should also come less volatility.
The pork industry is well positioned to take advantage of several years of favorable consumer expansion, driven by improving domestic consumption and foreign demand.
The hog industry expansion will not be large enough to return corn prices to the previous lofty levels. However, when all animal industries are included it will be a period of growing feed use base for corn growers.
Thus, it is anticipated that in coming years there will be a better balance between the crop production sector and the animal sector.
Assuming ethanol use is relatively level in the future, this means corn farmers have achieved the goal of providing sufficient production for both food and fuel.