Breeder’s Losses Seen in Higher Hog Futures

Record heat has sparked livestock feed costs considerably, at a time when most hog producers were expanding their herds.  Now, the hog farmers profit may have taken a turn for the worst.

At the beginning of 2012, based on lowering costs & overhead, hog producers predicted a $20 per animal profit.  Hog farmers even held back nearly 10% of the sows for breeding (as of June 1st), but the unexpected rise in feed costs has now changed their entire hog expansion outlook.

Barb Levy, chief director at Futures & Options Execution’s Futures Division in Chicago, stated today regarding the current hog futures situation, “…Midwest drought conditions continue, shedding doubt on the record corn crop that was previously expected. Predicted lower feed costs had hog farmers expanding their breeding herds.”

Hog futures have rallied nearly 18% in just the last two trading session with their overall trend which began earlier this month.  We have taken profit on hog futures today in lieu of tomorrow’s USDA crop progress report, but will reevaluate initiating another position after the crop report has been released

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