June 12, 2006

 

Higher corn prices causing concern among US hog producers

 

 

The burgeoning demand for US corn to be used in ethanol production would lead to higher corn prices which would trim hog producers' profits and lead to higher meat prices for consumers, market analysts at the 2006 world Pork Expo predicted Friday (Jun 9).

 

Cash corn prices are expected to average US$2.45 a bushel for the 2006-2007 marketing year, the USDA said, up 22 percent from the average for the marketing year that ends Aug 31.

 

Iowa corn prices would average about US$2.35 a bushel next year and could climb to US$2.70 per bushel in the 2007-2008 marketing year and US$2.85 a bushel the following year, thanks to ethanol, said Robert Wisner, an Iowa State University Extension economist.

 

Ethanol production is expected to consume at least 14 percent of US corn production. 

 

Iowa, being the lead producer of corn, soy, pork, eggs and ethanol in the US, is expected to be the state most affected by the changes.

 

The greatest impact would fall on livestock feeders, because feed costs represent the largest production expense, said John Lawrence, an ISU Extension economist who is director of the Iowa Beef Center in Ames. The grain accounts for over half of the cost of hog and cattle feed.

 

On the other hand, ethanol production could reduce costs for farmers who feed livestock dried distillers grains, a by-product of the ethanol process.

 

Swine and poultry feed can contain up to 10 percent distillers grain, while in cattle it can account for up to 40 percent, Lawrence said.

 

Feed costs would be reduced especially for operations near ethanol plants, he said.

 

Farmers are now considering raising more corn and less soybeans to meet the rising corn demand.