As crops struggle to grow in waterlogged fields, hope for feed price relief is draining for U.S. pork producers.
As water stands in fields across many areas of the Corn Belt, crops are struggling to grow this year. For U.S. pork producers, a year they hoped would be full of relief is quickly draining into the possibility of more feed troubles through 2014.
"Everything in U.S. agriculture still depends on weather," says Steve Meyer, president of Paragon Economics. "We got such a late start on this corn crop. We could still raise a great corn crop. But things have got to change pretty fast if we're going to do that. We’ve probably taken some of it off already."
It’s more than just the fading outlook for a record corn crop that’s troublesome for pork producers. Farmers still have a lot of soybeans left to plant.
"In 2009, I had pork producers in Illinois and Wisconsin couldn't buy soybean meal for any price in August of that year," says Neil Dierks, CEO of National Pork Producers Council. "And the reason was, it was just availability."
Iowa pork producer Sam Carney grows his own grain. His crop is in the ground, and so far, he has enough feed for his livestock. Given the late planting, however, he’s afraid that could change.
"We're a little scared that we could run out this year," says Carney. "We're really, really nervous, but i think we'll make it. We thought, well, we'll go combine early, but we didn't get planted early like we usually do."
Producers who didn’t grow their own feed last year struggled to make a profit.
"We had big losses last year," says Dierks. "We had people losing 35 to 40 dollars per animal, when an animal is worth $200 so, we've had some tough goes."
Another year of possible $7.00 or $8.00 corn could prove too much for many producers who were able to ride out the tough storm during last year’s drought.
"I mean $5.00 or $6.00 corn, $300 soybean meal would leave our cost of production significantly lower in 2014 than they are this year, and leave us profitable I think next year," says Meyer.