Show Me the Money! The fiscal year 2012 rode the roller coaster as a tremendous planting season was overshadowed by drought through the summer months. Producers saw profits dwindle away as corn and soybean meal prices skyrocketed and hog prices hovered with discussions of plentiful pork supply. Dr. Meyer shares his insight of what 2013 may hold in store for pork industry economics.
Hot / Humid and the Price of Feed The Chinese farmers are aware of the US drought conditions and had lots of questions on how bad it might be and where it drought is occurring in the United States. Corn prices in China (Shandong province, China) are about $10.50 and soybean meal (SBM) prices are around $540/ton. Pigs are at break-even levels for the year or even less for some. Excellent producers are now making less than $15/head. It is possible that corn in China will go to $15/bushel this next year and SBM to $600/ton.
Much of the poultry industry is failing and falling fast. Most of the feed companies are not making money this year at best and losing a load at worst! The weather has been mild in their eyes, but I find that heat and humidity are pretty much like the worst in the Midwest. Corn looks real good and everything is green! They use irrigation and can do that with individual water hoses that are dragged from row to row by the owners. This is best described by a clear plastic tube that looks to be about 2 ½ inches and pretty light plastic (we ran over one on the driveway and it started a nice water shooting display) [Editor note: text Jim Lease, JBS United].
Agriculture Markets How are commodities and markets important to agriculture? What are some of the information sources to use? What are some of the issues in the markets today? This AgChat conversation, with the help of guest of Farm Futures Arlan Suderman (@ArlanFF101), looks into these questions.
Dr. Chris Hurt shares some economics updates and what producers need to consider on their feed management as 2012 moves forward. Key take away: Swine producers have the financial ability to outbid ethanol producers for corn. This is forcing ethanol plants to shrink in capacity or shut down. Also, foreign trade is becoming a key component for the industry.
China's growth means that many of its raw materials to sustain the growth must come from other parts of the world. To help gauge Chinese demand for materials, many companies and governments rely on estimates from the China National Bureau of Statistics and other sources, like U.S. Government agencies. If, however, the estimates are wrong one way or the other by a larger than expected margin, the commodity markets start to react, and cause some companies to loose business and revenue.
China's National Bureau of Statistics said that farms produced a record corn crop in 2011 of 191.8 million tonnes. But enthusiastic local officials often overstate the size of crops in China to impress central authorities and win bigger subsidies.
How will the pork industry fare in 2012? Dr. Steve Meyer says 2012 has five key issues to keep an eye on: exports, U.S. Demand, feed prices, hog/pork supplies, and packing capacity. Steve also highlights the relationships between crops and costs.
Total feed supply is going down. This means we either get more efficient or we get smaller.