Lean Times for Hog Producers Due to Rising Corn, Soybean Prices

US - Hog producers are facing tough times because of rising corn and soybean prices.
calendar icon 9 June 2008
clock icon 3 minute read

Jason Gienger stuck a meat fork into a rack of pork ribs sizzling on the grill Friday at the World Pork Expo at the Iowa State Fairgrounds.

These are lean times for hog producers like Gienger, who have been dealt a blow by corn prices that are 52 percent higher than a year ago and soybean prices that are 76 percent more than a year ago.

"It's been a rough year with these corn and soybean prices on a wild ride," said Gienger, 24, who estimated he's lost $25 on each hog he's sold from his operation near Gladbrook this year.

According to estimated returns for Iowa farrow-to-finish hog producers compiled by Iowa State University Extension, the cost of raising a 270-pound market hog is $155, up 12 percent from January, reports DesMoinesRegister.

Although a hog price rally in May boosted Iowa hog producers' profits to $4.78 a head, losses in January through April averaged almost $32 for each hog sold.

The financial toll hits young producers like Gienger harder than older, more established hog producers.

Hog market analysts who spoke Friday at the World Pork Expo said the losses won't stop soon.

Glenn Grimes, agricultural economist emeritus at the University of Missouri in Columbia, said "it's almost a given" that feed costs will continue to rise as they have for the previous two years. Meanwhile, hog prices in 2009 will be about the same as this year, Grimes said.

"How do I survive the next 12 to 15 months?" Grimes said hog producers should be asking themselves. "The critical question is, 'How can I minimize losses?' rather than 'How can I maximize profits?' "

Steve Meyer of Paragon Economics Inc., an economist and consultant to the hog industry, said producers should look at shaving costs everywhere they can, because prices for corn and soybeans probably will be going up, not down.

"This year's corn crop was critical" to meeting demand from ethanol plants, livestock feeders and exporters, Meyer said.

Poor planting conditions so far this spring don't bode well for the 2008 U.S. corn crop, he said. "We will not run out of grain, but prices will be high," he said. "I can't see working out of this until 2010."

History also is not on the side of a big corn crop.

View the DesmoinesRegister story by clicking here.

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