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ture, there will be a big demand for feeders, to put them on grass awhile. Conversely, if there is a drought, they will all get dumped on the market. That's an example. There are a hundred other things. My impression is that this year, many ranchers are unwilling to take the price bid for feeders, so they are retaining owner-ship right into the feedlot. To take it a step further, had they sold the feeders, the prices would be lower than they are now. |
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Now, regarding lean hogs: this morning they are quoting live hog prices in Iowa at 8.50 to 13.50 $/cwt (that's $21.25 to $33.75 for a 250-lb hog). If you assume a 74% dress, that's a lean hog price of 11.50 to 18.25. February futures are trading 30.07. If cash does not rally, I would expect the futures to drop. The big premiums in the back month LH futures are really bearish for the hog complex in general; it sends all the wrong signals to the market. |
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As I understand the problem in general, many of the large hog producers (factory farms) have a contract with the packers for X amount of hogs at a fixed price (with some adjustments). I read last week that the contract price is in the high $30.00s/cwt on a live basis (divide by 0.74 for LH price). With the current price of wholesale pork cuts, the packers basically have let the price drop (on noncontract hogs) to get to a break-even on kill margins. According to the article I read last week, if a packer is killing 40% contract hogs, they are close to break-even overall by paying current prices for the remaining 60% of the kill. |
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I buy a lot of bottled water (I spend time in the boonies), and the cheapest I've found is at Wal-Mart for 50 cents a gallon. That would be $24.00 per barrel (to compare with crude oil), and crude is trading for $11.00and that's for the good crude. |
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I'm buying gas for 74 cents a gallon, and that includes 38 cents of road tax. So I could buy tax-exempt gas for 36 cents a gallon. Too bad we can't drink gas. My wife made chicken noodle soup the other night, with a whole chicken. After I complimented her on the fine meal, she mentioned that the bread for the meal cost more than the meat. |
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China announced that they will produce 501 to 503 million metric tons (MMTs) of grain this year, which is just shy of the record 504 MMTs produced in 1996. And this is with record flooding. |
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