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Crop potential, herd growth big hog topics

Jeff Caldwell 06/07/2012 @ 1:03pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

What's the weather like out there? The answer to that question -- as well as what it means to the corn and soybean crops in the field right now -- will have a huge influence on the hog market moving through the rest of this year and into 2013. So, what's that mean for the average hog farmer?

Questions like these were common at the 2012 World Pork Expo held this week in Des Moines, Iowa. Farmers, industry experts and leaders, and company representatives -- some of whom from one of 38 other nations represented at this year's Expo -- had a lot to see and do at this year's event that took place against a backdrop of a lot of cloudy outlooks regarding feed costs, weather and the prospects for expanding the hog herd in the next few months.

"Feed costs were one of the big issues for us: How do we expand when corn and soybean prices were going up?" says Kati Hagenbuch, a hog farmer from Utica, Illinois, who with husband John recently doubled capacity and switched from farrow-to-finish to contract feeding.

The timing of any herd expansion is arguably the difference between making it work and losing money right now, says Purdue University Extension livestock economist Chris Hurt. You don't necessarily want to follow the pack and grow when everyone else does, because that lessens your chances of enhanced profits in doing so. Timing it just right -- a couple months ahead of the general trend -- could have a huge impact.

"Probably the biggest advantage on timing of expansion is if you can move before the rest of the pack moves. What that says is I can start 2 months before the rest of the pack," Hurt tells Agriculture.com. "That gives me the prospect of having pigs finished and in the marketplace before supplies go up. Those 2 months of profitability can actually be pretty substantial. When they're profitable, they're really profitable."

That makes Hagenbuchs glad they acted when they did. "We've already jumped that gun. We're pretty much done with expansion for now," John says.

But, Hagenbuchs have a grain operation alongside their hog business. So, they've benefited from the last few years' higher grain prices. What if you're only relying on corn and soybean meal as a feedstock and not selling it for profit? That's made $7/bushel corn prices a tough pill to swallow. That pill could be getting smaller, though, says Paragon Economics grain and livestock specialist Steve Meyer. Recent data show that the 2012 corn crop's off to a good start, and if it continues, Meyer says feed prices could slip back down into a more profitable range for hog feeders.

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Weather Trumps Demand