Parsons, Kansas —
An increase in lean hog prices and a decrease in feed costs have combined to reduce the drought's effect on the pork industry, a Purdue Extension agricultural economist says.
During the height of the drought, when December corn futures reached $8.49 per bushel and December soybean meal futures reached $540 per ton, markets anticipated heavy liquidation of sows. That feared liquidation dropped December lean hog futures to $70, and producers anticipated per-head losses of $50-$60, Chris Hurt said.
"A panic response might have been to cover substantial amounts of feed needs at record high prices, to forward-price lean hog futures before the outlook worsened or to just sell out altogether," he said. "Now that the damage from the 2012 drought is better known, those who did not panic are facing much smaller losses than what were feared at the height of the crisis."
In drought years, feed prices often peak at or just after the height of the drought, then decrease. That trend has continued in 2012, with December corn futures now near $7.40 per bushel and December soybean meal futures closer to $425 per ton.
According to Hurt, a $1-per-bushel reduction in corn prices and a $100-per-ton reduction in soybean meal prices lower hog production costs by about $12 per head.
"Lower feed prices are important to the reduction in anticipated losses, but improved lean hog prices have been even more significant," he said. "December lean hog futures are currently above $80, which represents at least a $10 increase over drought-induced liquidation fears in early September. A $10 increase in lean hog prices means more than a $20 reduction in anticipated losses."
The increased lean hog prices combined with lower feed costs have translated into reduced losses of about $30 per head—about 40 percent coming from the lower feed prices and 60 percent from higher lean hog futures, Hurt said.
That's not to say that sow liquidation didn't occur. Producers increased sow slaughter in early July and continued that trend through mid-October.
"During this 14-week period, sow slaughter averaged four percent higher than for the same weeks of 2011 and likely resulted in a national breeding herd reduction of about two percent," Hurt said. "In the weeks since mid-October, sow slaughter has dropped below previous-year levels as optimism for a much-improved outlook in 2013 was unfolding."
That optimism might be warranted. Hurt said a return to profitability could come as early as spring. While he estimates losses of about $15 per head will continue through the first quarter of 2013, live-hog prices are expected to reach the break-even point by early May. The second and third quarters of 2013 could bring a return to profitability of about $10 per head.
Lower feed prices could keep the pork industry profitable into fall 2013 and winter 2014, Hurt said.
But even with a projected return to profitability, he warned producers not to be hasty with thoughts of expansion.
"Some producers might want to jump the gun and get expansion started in the spring of 2013. But one glance at the current Drought Monitor tells us that normal crop yields in the U.S. for 2013 are far from assured," Hurt said. "The uncertainty should keep most producers from expansion fever until the crops are more nearly assured in late-July and August." £
Livestock
Lean hog prices lessen drought effect on producers
- Livestock
-
-
Early summer deworming of nursing calves
Five deworming trials were conducted at the Eastern Research Station located near Haskell, Okla., during the 1990’s. Crossbred cows and their Charolais sired calves were sorted by sex of calf, calf age and cow age, then randomly allotted to one of four treatments.
-
Raising backyard chickens requires basic knowledge
Interest in keeping chickens in the backyard as a source of eggs and meat is on the rise among both urban and suburban dwellers according to Jess Lyons, a small flock specialist with University of Missouri Extension.
-
Cow slaughter continues above last year
Total beef production for the year to date is down 1.3 percent and total slaughter is down 2.1 percent compared to the same period last year. Both beef production and slaughter have been larger in recent weeks and the year to date total is down less than expected. A significant part of larger than expected total slaughter is the result of increased cow slaughter.
-
Short-term calf removal
Short-term calf removal is the term that describes the temporary physical separation of the calf from its mother. This removes the nursing stimulus from the cow for about two days.
-
Kan. beef cattle numbers lowest since 1999
The number of beef cattle on Kansas feedlots is at its lowest point in 14 years, thanks to an ongoing drought, and industry officials said some producers could find themselves out of business if this year continues the dry pattern.
-
First green grass doesn’t meet cattle’s nutrient needs
Turning cow herds out to graze pastures at the first sign of green grass harms forage growth later in the season. But there’s another big reason to wait, says a University of Missouri beef nutritionist.
Cows don’t benefit from early grazing as much as most herd owners believe. -
Breeding soundness of bulls should involve Trich test
One of the most important factors in determining the profitability of a beef herd is the number of calves weaned per cow exposed.
-
K-State livestock program equips youth with swine ownership skills
Agriculture needs young people — they are the future of food production and their creativity and enthusiasm for agriculture will set the stage for addressing the trials of this century.
-
Temperament plays key role in cattle health
U.S. Department of Agriculture (USDA) and university scientists have found that cattle temperament influences how animals should be handled, how they perform and how they respond to disease.
-
One calving season verses two calving seasons
The beef industry has seen a “down-sizing” due to the drought affecting many cow herds. Much has been written and spoken about the need to “rebuild the cow herd.” When the return of good moisture allows for adequate forage growth and pasture conditions to improve, ranchers may need to self-examine their operations and look at breeding season alternatives that provide greater sustainability moving forward.
- More Livestock Headlines
-
Early summer deworming of nursing calves
