June 5, 2009

Forecasts for higher corn and soy prices are an added worry for the US' hog producers since most are already losing money and have been for the past 20 months.

Robert Wisner, agricultural economist at Iowa State University, said unusually wet weather in Illinois, Indiana and North Dakota has resulted in nearly 5.0 million acres not yet planted to corn, based on the latest US Department of Agriculture crop update reports released Monday (June 1).

That number of acres not yet planted to corn could mean a decline in per-acre yields and some switching to soy, he said Wednesday at the World Pork Expo.

Wisner also said fund accounts have been actively trading again in grain futures, which has contributed to rising board prices. Sharp declines in South American grain production along with rising crude oil prices have been supportive for grain prices as well.

Other factors contributing to higher prices for soy include more purchasing of US soy by China.

Wisner said local shortages of soymeal in August and September is a definite possibility with the sharp drop South America's spring 2009 soy harvest. He foresees much tighter-than-normal soybean stocks as of Aug. 31, at just 2.2 weeks of supply compared with 3.5 weeks in 2007 and 2008. This, he said, would be the smallest for that date since at least 1965.

Hog producers could see breakeven costs rise by several dollars per hundredweight from levels earlier in the year. Facing losses this spring and early summer from depressed prices influenced by the AH1N1 influenza cases, many hog producers have already been drained of their equity, analysts said.

With input costs expected to rise further and hog prices seen declining on a seasonal basis later in the year, swine producers face even more uncertainty in the months ahead.