Athens Review, Athens, Texas

Breaking News

In the News

September 26, 2012

VIDEO: Bacon, pork shortage expected for next year

CHICAGO — Hog farmers are slaughtering animals at the fastest pace since 2009 as a surge in feed costs spurs the biggest losses in 14 years, signaling smaller herds next year and a rebound in pork prices.

The 73.3 million hogs processed in eight months through August were the most in three years, U.S. Department of Agriculture data show. Pork supply will drop to the lowest per- capita since 1975 next year, the USDA estimates. Hog futures that fell more than any other commodity since June 30 may surge 39 percent in 12 months to as high as $1.055 a pound, based on the median of 12 analyst forecasts compiled by Bloomberg.

Crop damage from the worst U.S. drought since 1956 sent corn-feed prices surging to a record last month and may mean losses of about $44 a head for hog farmers in the fourth quarter, the most since 1998, Purdue University estimates. Two producers in Canada filed bankruptcy petitions this month. While the acceleration in slaughtering is boosting supply now, buyers including CKE Inc., the owner of Hardee's and Carl's Jr. fast- food chains, expect higher prices in 2013 as herds shrink and U.S. exports rise.

"We're going to see more consolidation in the industry," said Mark Greenwood, who oversees $1.4 billion of loans and leases to the hog business as a vice president at AgStar Financial Services Inc. in Mankato, Minn. "It's only going to get worse on the higher feed prices."

Futures on the Chicago Mercantile Exchange fell 20 percent since June 30, the biggest drop among 24 commodities tracked by the Standard & Poor's GSCI Spot Index, which rose 11 percent. The MSCI All-Country World Index of equities gained 7.7 percent this quarter and Treasuries returned 0.2 percent, a Bank of America Corp. index shows.

A pig eats 10 bushels of corn to reach a slaughter weight of about 270 pounds, the University of Missouri at Columbia estimates. Corn futures rose 47 percent since mid- June after the USDA predicted the drought will cut domestic output by 13 percent. Prices reached a record $8.49 a bushel in Chicago on Aug. 10.

Producers may receive about $56 per hundredweight for hogs in the fourth quarter, and the cost of production is estimated at about $72.29 per hundredweight, said Chris Hurt, an agricultural economist at Purdue University in West Lafayette, Ind. That means farmers may earn about $151.20 for a 270- pound hog that cost about $195.18 to produce.

Hog farmers will see "huge amounts of red ink" in the fourth quarter, said Jim Robb, the director of the Livestock Marketing Information Center, which is funded by the industry, universities and government. Fewer sows will be kept for breeding, cutting output and tightening pork supply, he said. That will raise both wholesale and retail prices to records by the second half of 2013, Robb said.

Prices for now are retreating, with wholesale pork costs tracked by the USDA tumbling as much as 25 percent since June 25 to the lowest in almost two years on Sept. 19. Hog slaughtering climbed 2.8 percent in first eight months of the year, the most since 2009, when farmers sought to shrink herds amid weaker demand following the global recession and the outbreak of the H1N1 virus, known as swine flu.

The 12 percent drop in corn prices from a record last month, and the prospect of bigger harvests next year, may encourage some hog farmers to slow their herd reduction. Slaughter rates in the five weeks through Sept. 1 rose less than 5 percent from a year earlier. That may leave enough sows to accelerate production once feed costs have come down enough, Rachel J. Johnson, a USDA economist, wrote in a Sept. 18 report.

Meatpackers processed an estimated 79.735 million hogs in this year through Sept. 22, 2 percent more than a year earlier, government data show. Animals sold at slaughterhouses fell to 63.58 cents a pound on Sept. 14, the lowest since Nov. 26, 2010. Prices retreated 8.5 percent this year.

Lean-hog futures for July delivery are trading at 97.725 cents a pound, compared with 75.875 cents for this December, a sign traders are already anticipating fewer supplies next year. Per-capita pork supplies will shrink to 45.2 pounds next year, the lowest since 1975, the USDA estimates.

Hog producers are retaining fewer gilts, or young females that haven't had a litter yet, reducing the number available to replace older sows, said Rich Nelson, the chief strategist at Allendale Inc. in McHenry, Illinois, who has tracked the market for about 15 years.

Even with higher prices, pork will remain cheaper than beef, said John Nalivka, the president of Sterling Marketing Inc., an agricultural economic research and advisory company in Vale, Ore. Wholesale pork fell 8 percent to 78.34 cents a pound this year, as beef declined 1 percent to $1.9269 a pound, USDA data show.

"If you got sticker shock on pork, you'll have a heart attack when you look at beef," C. Larry Pope, the chief executive officer of Smithfield Foods Inc., the world's biggest pork processor, said on a conference call with analysts Sept. 4.

Bob Evans Farms Inc., the Columbus, Ohio-based restaurant chain, has seen a drop in sow costs as herds are liquidated, and expects prices to stay low until the culling stops, CFO Paul DeSantis said on a conference call with analysts Aug. 15. Once that is over, "prices tend to increase very rapidly," he said.

Big Sky Farms, the second-largest hog producer in Canada, went into receivership this month partly because of rising feed costs, said Neil Ketilson, the general manager of the Saskatchewan Pork Development Board. The company produces more than 1 million pigs a year, according to its website. Puratone Corp. sought protection from creditors on Sept. 12. The Niverville, Manitoba-based company markets more than 500,000 hogs per year, according to its website.

Brad Hennen, a hog producer in southwest Minnesota, is reducing the size of his business because costlier feed and declining prices for weaned pigs. While he generally markets as many as 15,000 pigs annually, he expects to sell no more than 6,000 this year.

"It could easily get worse than that," said Hennen, who has been raising hogs since 1987 and is based about 3.5 miles northeast of Ghent, Minn. "What can I do now to minimize my losses and still have a business for when the cash starts flowing again?"

               

       

1
Text Only
In the News
  • How states fared on unemployment benefit claims

    Applications for U.S. unemployment benefits increased slightly last week to a seasonally adjusted 304,000.

    April 17, 2014

  • bomb1 VIDEO: A year after marathon bombing, Boston remains strong

    The City of Boston came together Tuesday to honor those who were injured and lost their lives at the Boston Marathon on the one-year anniversary of the bombing. While the day was sure to be emotional, those affected by last year's race are showing they won't let the tragedy keep them down.

    April 15, 2014 1 Photo

  • Conjoined boys separated at chest to exit hospital

    The conditions of conjoined twins separated last summer have steadily improved, and officials say they'll be released this week from a Dallas hospital.

    April 14, 2014

  • Police: Utah mom admitted to killing her 6 babies

     Authorities say a Utah woman accused of killing six babies that she gave birth to over 10 years told investigators that she either strangled or suffocated the children and then put them inside boxes in her garage.

    April 14, 2014

  • Texas grand jury to be seated in Perry ethics case

     A Texas judge is expected to seat a grand jury in an investigation into whether Republican Gov. Rick Perry abused his power by vetoing funding for public corruption prosecutors.

    April 14, 2014

  • VIDEO: CBS taps Colbert as Letterman’s Late Show successor

    Bloomberg’s Jon Erlichman reports that CBS has announced Stephen Colbert as its choice to replace the retiring David Letterman as host of “The Late Show” on Bloomberg Television’s “Lunch Money.”

     

    April 11, 2014

  • mfp file Hoffner Big win for college coach wrongly accused of child porn

    The ex-coach of Minnesota State University-Mankato - cleared on child porn charges - gets his old job back or could take the difference in pay should he decide to stay in a new position in North Dakota, an arbitrator has ruled. Todd Hoffner was accused when a technician found videos of his young children on his school-issued cellphone. Officials in Mankato fired him even though a judge had thrown out the charges.

    April 11, 2014 1 Photo

  • Mabank’s Cassiddy Petty takes first, second in Dairy Cattle

    Not many agriculture students travel to a county’s stockshow, and wins every place in their particular category.
    But, that’s what happened Wednesday night at the Henderson County Livestock Show with Cassiddy Petty, a senior at Mabank High School, and a member of the Chandler 4-H.

    April 10, 2014

  • Screen Shot 2014-04-10 at 10.25.07 AM.png VIDEO: Cement truck crashes into minivan

    A professor at Texas A&M University was fortunate to escape serious injury recently when a cement truck ran a red light at a College Station intersection and crashed head-on into his minivan. A dash camera that Dr. Guan Zhu had installed about a year ago captured the entire incident.

    April 10, 2014 1 Photo

  • BREAKING NEWS...Authorities investigate East Texas fatal shooting

     An East Texas shooting has left one person dead.

    April 10, 2014

Biz Marquee
AP Video
Crew Criticized Over Handling of Ferry Disaster Agreement Reached to Calm Ukraine Tensions Raw: Pope Francis Performs Pre-easter Ritual Raw: Bulgarian Monastery Dyes 5000 Easter Eggs Diplomats Reach Deal to Ease Tensions in Ukraine U.S. Sending Nonlethal Aid to Ukraine Military Holder: Americans Stand With KC Mourners Obama Greets Wounded Warriors Malaysia Plane: Ocean Floor Images 'Very Clear' Sparks Fly With Derulo and Jordin on New Album Franco Leads Star-studded Broadway Cast Raw: Two Lucky Kids Get Ride in Popemobile Boston Bombing Survivors One Year Later Sister of Slain MIT Officer Reflects on Bombing