Pork Prices Peaking As Corn Bust Spurs Hog-Herd Expansions
July 20, 2011 | 1 min to read
The biggest slump in corn in three years may mean the end of record pork prices as cheaper feed spurs farmers to expand hog herds for the first time since 2007.
Corn-feed prices dropped to a six-month low on July 1 after the government said farmers planted the second-highest number of acres since 1944, while traders were anticipating a drop. Record pork exports helped drive hog futures to the highest level in a quarter century in April, returning the industry to profit after $6.2 billion in losses in the 29 months through February 2010.
Midwest farmers may make $20 a pig in the next 12 months, compared with a loss of about $20 at the end of 2010, said Mark Greenwood, who oversees $1.4 billion in loans and leases to the industry as a vice president at AgStar Financial Services Inc. in Mankato, Minnesota. Futures may drop as much as 16 percent from the closing price on July 15 to 76.95 cents a pound next year if expansion occurs, according to the average estimate in a Bloomberg survey of 11 analysts.
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