March 2, 2005

 

US hog feeders take note of corn, soymeal price rallies

 

 

US hog feeders are keeping a closer watch these days on corn and soymeal prices since the markets for these key feed ingredients have rallied significantly in the past four weeks.

 

Chicago Board of Trade March corn futures on Monday climbed to a 3 1/2-month high of $2.16 1/2 per bushel, a rally of 22 1/4 cents from the contract low of $1.94 1/4 hit on Feb. 3. CBOT corn prices eased a bit Tuesday.

 

CBOT March soymeal hit a six-month high Tuesday at $184.80 per short ton before selling off to close lower on the day. The market has rallied recently from a contract low of $148.10 hit on Feb. 7.

 

Tuesday's high for CBOT March corn futures, at $2.16 1/2, is still well below the flat average of annual highs and lows over the last 25 years. That average is $2.58 per bushel.

 

Wednesday's top in March soymeal, at $184.80, compared with the 25-year flat high-low average of $194.40.

 

Prices are still relatively low on a historical basis, but they have rallied enough recently to make swine producers take notice, especially those who purchase feeder pigs rather than produce their own, industry sources said.

 

Feeder pig imports from Canada have declined since anti-dumping duties were initiated by the US in October. During the first seven weeks of 2005, feeder pig imports averaged about 100,500 head, compared with 116,553 head for the same period last year. The weekly average for all of last year was nearly 106,000 head.

 

A livestock dealer in Iowa said hog finishers who purchase pigs have paid high prices for pigs recently and that the rising feed costs are a concern.

 

Strong demand for slaughter hogs pushed prices up last year to very profitable levels, and demand for pigs from hog finishers has been stout this winter. However, rising feed costs and not enough time to get the pigs to slaughter weight by the peak of the slaughter market, which usually occurs in June, could result in a more cautious approach among pig buyers.

 

It takes approximately 5 1/2 to six months for the smaller segregated-early-weaned (SEW) pigs to reach slaughter weight and less time for the 40- to 50-pound pigs to reach marketing weights.

 

June lean hog futures Tuesday closed at 80.55 cents per pound, while July ended the day at 77.10 and August at 73.45.