Swine Industry Update: The Roller Coaster Ride Continues
I had client who recently told me about his vacation to Las Vegas. My natural response was, “Why would you go to Vegas when being in the hog business today is like being in Vegas everyday?” Anyone involved in today’s swine industry must be shaking their head. Never before in my ag career have I seen the level of volatility we are seeing today. The grain report on August 11th reported corn below $5.00 a bushel and it appeared we had more corn than previously thought. Corn should continue to go down, right? Well, that logic is out of the equation; corn is now over a $1 higher than two and half weeks ago and soybean meal is up over $50 a ton. Breakeven costs in a span of 15 work days have increased by over $15 a head. Just two weeks before the August 11th report, corn was $.50 a bushel higher and meal was higher by $25-$30 a head. It seems a dull day would entail corn only going up $.10 and soybeans up only $.20. Even the overnight trade is volatile.
Hog Prices are Just as Wild
The cash hog market has been almost just as volatile. Cash hogs hit nearly $90 only about 10 days ago; today cash hogs were trading in the low $70’s. Hog revenue has risen nearly $20 a head in a two week period and then fallen over $30 in another two week period. If you look at the pork cutout report over the last five reporting days you can see the drop in value over this time.
Volatility will become the Norm
During this time of volatility it is natural to move to a state of shock and freeze because it’s difficult to react. I have told clients that I think this state will become the norm. We must all become comfortable handling volatility and become more aware of all the factors in the marketplace. I wish I could believe the market will correct itself, but in agriculture today I think volatility is here to stay.
So, what should I do?
When I look at successful companies today, I think there are certain things they do better than anybody else.