Projected profit margins for Q4 are now negative vs. an indicative $7.00/cwt profit less than one month ago. Other margins through the first half of 2012 are now only slightly above average after flirting with the 90th percentile of the past five years.

While cash hog prices remain at all time highs supported by a strong export market and Chinese demand in particular, there is growing concern over the possibility of a double-dip recession and slowing global demand that has weighed on deferred hog prices following the recent downgrade of US sovereign debt and the associated volatility in outside markets.

Meanwhile, corn prices reached new contract highs after USDA lowered their yield forecast for this year’s crop to 153 bushels per acre, down 5.7 bushels from July due to extremely hot temperatures and below-normal precipitation throughout much of the Corn Belt during July. Acreage was also reduced and production was forecast down 556 million bushels from last month.

• 3rd Qtr 2011 Highest profit opportunity offered was in the Spring of ’11 at $13.38, the low was early Summer at ($2.96). Last week ended offering a hedge profit of $2.68. The five-year percentile is 53.5 per cent
• 4th Qtr 2011 High offering $7.06, the low was ($4.26), last week ended ($1.35) and the five-year percentile of 60.4 per cent.
• 1st Qtr 2012 High offering $6.87, the low was ($2.57), last week ended ($0.13) and the five-year percentile of 54.0 per cent.
• 2nd Qtr 2012 High offering $10.88, the low was $2.51, last week ended $5.87 and the five-year percentile of 49.5 per cent.