Hog Producers get Squeezed – 01/29/2021

The prosperity grain producers have enjoyed since harvest has squeezed hog producers financial balance. Hog prices have lost on both major costs of operation, corn and soybean meal. We have plotted the hog/corn and hog/soybean meal ratios for the winter quarter and both ratios are near or at 25-year lows. 

The hog industry nowy comprises mostly very large operations, but those owners, while less likely to react to what are viewed as temporary dislocations,  are not immune to low profit margins. Last fall’s farrowing intentions survey indicated winter farrowings would increase compared to last year while the number of sows bred for spring would be about equal to a year ago. Winter pig production won’t be affected by price ratios since harvest, but the spring pig crop could be curbed. The spring pig crop provides slaughter supplies for the autumn and early winter.