The pork industry is expected to have a profitable year in 2012. In fact, an expected 17-dollar per head profit could be the most favorable during the high-priced feed era which began in 2006. Purdue University agricultural economist Chris Hurt says, in 2006 feed-prices averaged about $2.30 per bushel for the calendar year and estimated hog profits were 27-dollars per head.
According to Hurt there are deeper and more important implications. First, the pork industry has made the adjustments necessary to live in a world of high-priced feed. Secondly, the industry probably has turned the corner on high feed prices with abundant and cheap feed wheat, prospects for moderation in the rate of growth in corn use for ethanol, the potential for a larger South American soybean crop, and hope for a return to higher U.S. corn and soybean yields.
Still, Hurt says, no one can know if feed prices are now moving into their post-peak period? But the declining prices of corn and soybean meal since August will have many debating that issue. There clearly are fundamental reasons to believe that could be the case. Hurt says, – the post-peak price feed period would be expected to be one of both lower feed prices and less volatile prices.
NAFB News Service