"I don't know that things have really changed and why some people are so worried about these higher corn prices," says Grassley. "In response to these high prices, farmers will grow more corn. In my lifetime we always used to talk about the corn-hog ratio. We used to say that high corn prices were good for the hog business in the long-term, good for hog prices. I still think that's true today. Some people say it may not be true anymore but I don't buy that."

True, there always isn't a direct parallel, says Grassley. With so many large hog buildings now and the business being vertically integrated to a large degree, there might be some lagging indicators. Maybe it will take longer for today's hog industry to respond to the higher corn prices. It may take longer for hog production to cut back on the numbers of sows bred and pigs produced. But eventually the hog industry will have to reduce production.

"If the hog corn ratio has worked for 100 years, I don't think it is going to go away now just because ethanol is using more corn," says Grassley.

Source: Wallaces Farmer