According to USDA’s Planted Acreage Report released on June 30th, corn acreage is approximately 3% lower than 2005. This means that unless we have record levels of production, corn prices could put a squeeze on pork profits.
The increasing demand for corn worldwide combined with decreased acreage and government fuel mandates for ethanol may put significant pressure on corn prices. In a recent Pork Magazine article, University of Missouri agricultural economist Dr. Glenn Grimes predicts that a rally in corn prices could produce a breakeven to a loss for swine producers. The article estimates that every 50-cent per bushel increase in corn prices adds an additional $2.50 per hundredweight to the breakeven cost of producing a live hog.
The USDA Report also finds that the 2006 soybean planted area is up 4% from last year at 74.9 million acres. Farmers report that 91% of the estimated soybean acres have been planted compared to a 10-year average of 82%.
Source:
Pork Magazine
USDA, NASS – Acreage Report