Hog Profits Depend on Corn Price?

In 2012, live hog prices are expected to be up modestly to about $65 per live hundredweight. Feed prices will be critical to whether pork producers can cover all costs in 2012. Production is expected to rise by nearly 2% as producers keep the herd near the same size, but higher productivity will provide the increase. USDA expects pork exports to rise by 4% in 2012 after being up by 17% in 2011. The U.S. industry is expected to export 22% of production next year. With higher exports, per capita supplies in the U.S. will be nearly unchanged. 

Hog producers can pay about $6.75 per bushel for corn and cover all costs. If corn prices are below $6.75 a bushel, then pork producers may be able to have some profits for 2012. Grain markets turned bearish after the September 12th release of USDA grain production estimates. With additional growing concerns over slowing world economic growth, corn and soybean meal prices dropped to levels that suggest some profitability for 2012. With December 2011 corn futures at $6.50 a bushel, the industry may have a profit of about $10 per head for 2012. The largest of the profits would come in the second and third quarter of 2012, with small amounts in the final quarter of 2011 and first quarter of 2012.