Will rising grain/feed ingredient prices slow the responses of livestock and poultry industries to the good times they have seen and, according to futures markets for most of this summer may see for most of 2011? That is a question running through many people’s minds these days as corn and soybeans both rallied on news of robust U.S. corn exports and anecdotal reports of disappointing yields and some potential quality problems for corn.
New crop CME Group corn futures were 10 to 12 cents/bushel higher today while new crop soybeans rose 13 to 15.5 cents/bushel, driving soybean meal futures up by $5.50 to $6.30 per ton. The feed price increases combined with a down day for CME Group Lean Hogs futures (nearby October off $1.30 and December
off $1.20/cwt.) continued a recent trend of declining profit expectations for U.S. hog producers.
Projected costs, based on Iowa State’s Estimated Costs and Returns parameters and today’s futures prices, have increased to the upper $60s for next year with the high being $69.45 for hogs sold in June. Projected profits for 2010 have fallen about $3/head since early June and projected 2011 profits are now sharply lower at $8.96/head with losses in Q4-2011.
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