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What to Expect in the Next Year in the Hog Industry

What to Expect in the Next Year in the Hog Industry. Shakespeare Swine Seminar Shakespeare, Ontario Sept. 19, 2012 Chad Hart Associate Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS.

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What to Expect in the Next Year in the Hog Industry

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  1. What to Expect in the Next Year in the Hog Industry Shakespeare Swine Seminar Shakespeare, Ontario Sept. 19, 2012 Chad Hart Associate Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS

  3. Spring 2012 Capacity at 5.4 days/week = 2.38 million head/week Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS

  4. Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS

  5. Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS

  6. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

  7. Source: Lee Schulz, ISU Extension

  8. U.S. Meat Production & Prices Source: USDA-WAOB

  9. Hog Crush Margin The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 pounds Pig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig Source: ISU Extension

  10. Potential losses Sept-12 through Jul-13 @ average of $34.64/head Source: Lee Schulz, ISU Extension

  11. Quarterly Forecasts Source: LMIC

  12. U.S. Pork Projections Source: FAPRI-MO

  13. U.S. Corn Supply and Use Source: USDA-WAOB

  14. U.S. DDG Supply and Use My estimates, so take with a grain (or pound) of salt

  15. U.S. Soybean Meal Supply and Use Source: USDA-WAOB

  16. Prices

  17. World Corn Production Source: USDA-WAOB

  18. Current Corn Futures 7.18 6.14 5.61 Source: CME Group, 9/12/2012

  19. Early Prices for 2013 Crops

  20. Total Acreage Shift Source: USDA-NASS

  21. Corn Projections Source: FAPRI-MO

  22. Thoughts for 2013 and Beyond • Breeding herd liquidation in Canada has picked-up • Year-over-year increases in sows sent to the U.S. for slaughter • Farrowing intentions (% year ago): -1.4 in 2012.qt3 and -1.3 in 2012.qtr4 • Domestic demand struggling • Down 6% in 2012.qtr2 compared to 2011.qtr2 • Exports increasing in importance • Export demand up 5% in 2012.qtr2 compared to 2011.qtr2 • First six months of the year exports are 12% above year ago levels Source: Lee Schulz, ISU Extension

  23. Thoughts for 2013 and Beyond • Supply/demand concerns • Soil moisture • South America gets 1st chance to respond to drought pricing • Will supply be able to keep pace with demand? • Drought is pulling supply down • But high prices are diminishing demand • General economic conditions • Continued worldwide economic recovery is a key for crop prices • US job recovery, European financial concerns, China? • 2012/13: USDA: Corn $8.20; Soy $16.00 Futures (as of 9/12/12): Corn $7.18; Soy $16.20 • 2013/14: Futures Corn $6.14; Soy $13.09 • 2014/15: Futures Corn $5.61; Soy $12.46

  24. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/~chart/Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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