publication archive: Chris Hurt
June 3, 2013
Hog Profits Return but Delayed Planting Keeps Producers WaryListen to MP3 podcast
Hog production has returned to profitability as hog prices rallied from the mid-$50s per live hundredweight in March to the low $70s today. Moderation in feed prices after the USDA's March Grain Stocks report was released in late March also helped reduce costs of production with second quarter costs averaging about $67 per live hundredweight compared to an estimated $70 in the first quarter. Delayed planting that is raising concerns about fewer planted acres and reduced yields has most recently sent corn and meal prices trending to the upside, raising concerns that hog production costs will not drop as much as some had anticipated.
April 22, 2013
Will Weak Cattle Prices Continue?Listen to MP3 podcast
I thought finished cattle prices were going to have a very bullish year with prices well into the $130s by now. Live cattle futures started the year with the same enthusiasm, but have deflated since. What went wrong?
April 8, 2013
Hog Profits May Still Return With Lower Feed PricesListen to MP3 podcast
As a new college graduate, my first job was with one of the major grain companies who took many market positions. The executives had a phrase that said a lot. "It's amazing how often we are right about the market, but for entirely wrong reasons." My previous statements that hog production could get back to profitability this spring was based on an expected spring hog price rally. The prospects for that rally, however, dimmed in February and March with the reality that pork exports were headed down. Now the prospects for a return to profitability have brightened once again, but due to an entirely different reason: much lower feed prices.
March 4, 2013
Spring Pork Price Recovery ThreatenedListen to MP3 podcast
Hog prices have dropped sharply in the past month, falling from about $67 per live hundredweight in early February to $58 recently. Futures prices have followed suit, with April lean hog futures dropping about $7.50 since the beginning of February. These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels as had been expected.
February 4, 2013
Where Have All the Beef Cows Gone?Listen to MP3 podcast
Cattle numbers are down again, to their lowest level since 1952, according to USDA's recent inventory count. Beef cow numbers are at their lowest level since 1962 as the devastating impacts of the 2012 drought continues the longer-term decline. Beef cow numbers were down three percent in 2012 and 11 percent since 2007. The drivers have been high feed and forage prices, persistent drought in the Southern Plains, and of course the widespread Midwestern drought of 2012.
January 7, 2013
Pork Profits on the HorizonListen to MP3 podcast
Pork producers have begun the chant "four more months" as they can now see the light of profits as they are set to emerge from a tunnel of losses. That tunnel of darkness stretched from the spring of 2012 through the winter of 2013, with average estimated losses of $18 per head, primarily due to high feed prices.
November 19, 2012
Pork Producers Did Not PanicListen to MP3 podcast
Here is some good advice: If you are in a crisis, DO NOT PANIC! Pork producers were facing a drought driven crisis late last summer. December corn futures had risen as high as $8.49 per bushel, December soybean meal futures had reached $540 per ton. Markets anticipated a fairly rapid period of sow liquidation which depressed the December lean hog futures price to $70 per hundredweight. The bleak outlook called for losses of as much as $50 to $60 per head in the final quarter of this year. A panic response might have been to cover substantial amounts of feed needs at record high prices, to forward price lean hog futures before the outlook worsened, or just sell out altogether.
October 22, 2012
Cattle Prices Will Continue to RiseThe impacts of the 2012 drought continue to play out in a beef industry discouraged by high feed prices and large cattle feeding losses. In the latest Cattle On Feed report, the USDA confirmed that placements into feed lots dropped sharply in September following substantial declines in July and August. As a result, on-feed numbers are now down nearly three percent as the beef industry is doing its part to reduce corn and other feed usage.
October 1, 2012
Large Losses Still Loom for Pork IndustryPork producers are expected to continue to suffer very large losses in the next six months after already operating in the red for the last six months. These large losses have been brought on by the extreme feed prices due to the drought. There is little producers can do to change the overall situation for the industry since the pigs that will represent these large losses are already on-feed. The pigs that are here today represent producers' plans earlier this year when they were hopeful for $5 corn prices.
August 27, 2012
Pork Industry Faces Record LossesListen to MP3 podcast
A tsunami of red ink is about to wash across the pork industry which is facing losses unseen even in the fall of 1998 when hog prices at times approached zero value. The stressors include: more hogs than expected, rapid sow liquidation now underway, and record feed prices. Losses in the final quarter of this year could be $60 per head, exceeding the previous record quarterly losses of $45 per head in the fall of 1998.
August 6, 2012
Drought and the Cattle IndustryListen to MP3 podcast
The beef industry has already experienced a number of difficult years characterized by falling cow numbers and declining per capita beef supplies. There was hope in the first-half of this year that this downward production phase was coming to an end, but the drought of 2012 has erased those hopes. So, where is the cattle industry today, and what do we know about the impacts of this year's drought?
July 9, 2012
Pork Industry Faces Financial Disaster?Listen to MP3 podcast
Drought and the impact on feed prices may be on the verge of creating a financial disaster for the pork industry and other livestock species. The crop stress which began in Indiana and Illinois is now spreading further to the west. Most of the media attention has been focused on crop producers who face large yield losses; however the animal industries may ultimately fare even worse.
May 21, 2012
Pork Producers Ask, What Happened?listen to MP3 podcast
There is an old saying that, "Life is what actually happens when you're planning on something else!" That adage is playing out for pork producers this spring. The spring hog price rally has not occurred and feed costs have now pushed to record high levels. This combination is resulting in a disappointing period of financial losses this spring and summer that was not anticipated earlier this year.
April 30, 2012
Is The Cattle Market Too Cautious?Listen to MP3 podcast
The beef industry was stung by two negative events in the past two months that have left market traders uncertain about their longer term impacts. For now, market participants are taking a cautious approach until consumers more clearly define if they will reduce beef consumption.
April 9, 2012
Pork Profit Outlook Gets TrimmedListen to MP3 podcast
The nation's pork producers are largely holding back on expansion even though the industry returned to profitability in the spring of 2011. However, higher feed prices in the past few months as a result of crop damage in South America has increased costs and reduced the profit outlook for 2012.
February 27, 2012
Will Consumers Come Back to Pork? Yes!Listen to MP3 podcast
Per capita pork consumption in the U.S. has declined sharply in the past several years due primarily to strong pork export growth. Per capita pork consumption in the U.S. averaged 50.1 pounds in 2006 and 2007 when $2 per bushel corn was still the rule. That dropped to a low of 45.8 pounds by 2011, a nine percent decrease.
January 30, 2012
Cattle Producers Show Surprise Interest in ExpansionListen to MP3 podcast
While beef supplies will be very short for several more years, the USDA's Cattle report indicated that the very early stages of beef cattle expansion has begun as beef heifer retention has increased a modest one percent. However, the big picture is that beef cow numbers dropped 3 percent last year and this will mean a smaller calf crop in 2012 that will keep cattle slaughter small for 2013 and 2014. If producers follow through with more heifer retention in 2012 and 2013, slaughter supplies will decline over the next two years and increase finished cattle prices even more.
January 3, 2012
Hog Producers Follow Prudent PathListen to MP3 podcast
Hog production returned to profitability in 2011, but producers remain cautious about the future. This is evidenced by the modest expansion of the breeding herd as reported by USDA at the end of the year. Limited expansion would seem to be the prudent path until more is known about 2012 crop yields and feed prices. This suggests no expansion of the breeding herd until mid-summer 2012.
November 21, 2011
Hogs: 2012 the Best Year in High-Priced Feed EraListen to MP3 podcast
The pork industry is expected to have a profitable year in 2012! In fact, the level of profitability could be the most favorable during the high priced feed era. Profits in 2012 are currently forecast to be near $17 per head, which would be the highest since 2006. That was the last year of the low feed price era when corn prices received by farmers averaged about $2.30 per bushel for the calendar year and estimated hog profits were $27 per head.
October 24, 2011
Cattle Can Eat Corn TooListen to MP3 podcast
Cattle feeders are going to use more corn than previously expected according to USDA's latest Cattle on Feed report that showed five percent more cattle in the nation's feedlots. The real surprise was the higher number of placements in September that has resulted in over one-half million more cattle being fed than a year ago. Feed grains used by cattle in feedlots from the 2011 crop will now likely be more than five percent higher than was fed from the 2010 crop.
October 3, 2011
Pork Outlook BrightensListen to MP3 podcast
Finally, pork producers have some positive news that has increased optimism for greater profitability in the coming year. That good news came from USDA in two forms. The first was the September Hogs and Pigs report which indicated little change in the size of the breeding herd. The second was the feed price lowering impacts of higher than expected corn inventories revealed in the September Grain Stocks report. The combination of stronger hog prices and lower feed prices has put the pork outlook back into solid black for the coming year.
August 22, 2011
Pork Producers Ability to Pay for CornListen to MP3 podcast
This year's corn crop is not big enough to meet the entire consumption base that has been built. Prices will have to be high enough to convince some end users to reduce consumption from current levels. Can the pork industry compete with other end users?
July 25, 2011
Beef Shortage Means Hold On To The CowsListen to MP3 podcast
The quantity of beef available to consumers in the U.S. has declined a startling amount in recent years and that trend is going to continue. The declining supplies are related to continuing liquidation of the cow herd in the past few years due to high feed prices, a weak U.S. dollar that is spurring beef exports, and of course drought in the southwest and southeast. Declining supplies will support prices across the cattle complex at new record highs in 2011 and again in 2012. Unfortunately, even higher retail beef prices can be expected for consumers.
June 27, 2011
Pork Outlook Looks Up as Corn Prices Go DownListen to MP3 podcast
Pork producers are maintaining the size of the breeding herd in the face of a very uncertain financial outlook. This cautious position would be expected given the wide swings in both hog and feed prices evident this spring. In addition, little change should be expected in the hog herd until the feed supply situation is better known this fall.
April 25, 2011
Cattle Prices Move Past Seasonal HighsListent to MP3 pocast
Cattle prices have had a remarkable run to the upside, with finished steers reaching the low $120s per hundredweight in early April. Now there are signs that those lofty prices will not be maintained into the spring and summer.
March 28, 2011
Hog Price Peak Coming Soon?Listen to MP3 podcast
The highest hog prices on record will soon be arriving. These may be the highest hog prices for the next several years as well, especially if corn and soybean shortages can be reduced somewhat this summer with favorable growing conditions. On the other hand, if 2011 turns out to be a short crop production year, then the previous statement will be invalid as surging feed prices will force added liquidation of the hog herd this fall. But, you already knew how much was riding on upcoming crops.
February 28, 2011
Pork Industry Walking Tight RopeListen to MP3
The pork industry in 2011 will be walking a tight rope between high hog prices and high feed prices. Consumers will be paying record high prices for pork. Producers will be receiving record high prices for their hogs, but also paying record high prices for feed. The outlook is in balance right now as hog prices are expected to be high enough to cover feed prices. However, the consequence of losing that balance could have extreme financial consequences on producers if consumers balk at high pork prices or weather threatens 2011 crops.