What's Going On In The Ag World?

Some of you may have seen some headlines about crazy corn/hog & soybean prices.  Here’s some highlights of what is going on.

1. Corn Prices – reached 13 year high this week to around $7.50/bushel.  December prices were around $4.25.  Tight supplies from heavy demand in China and a dry two months in Brazil (large corn producer) is fueling.  Long term demand is strong with Dec 21 prices over $6/bu mostly fueled by Chinese demand.
2. Soybeans - $15/bushel, with previous year pricing around $9.
3. Hogs - $88/lb with previous years around $50. Mostly fueled by demand in China and African Swine Fever hitting the swine complexes in China.

The 3 charts below show how China’s supply & demand controls the worldwide pork market. 

1. China consumes almost 50% of pork in the world.
2. China produces most of this themselves (but needs to import corn & soybeans to feed).
3. When China has a disease outbreak in pork and needs to import to meet demand it makes a huge spike in US exports.

(Interesting note: when the swine fever hots these complexes the pigs either die or must be destroyed. Then they clean, set empty for a couple of months, disinfect, and then need to repopulate with all new gilts (females) to start processing pigs again.)

Long story short: expect higher pork prices through mid 2022 (Dave's guess).

Beef is a different situation. Demand is strong and packing plants are producing at maximum capacity, operating Saturdays, etc. and thus meat prices have gone up. However, the supply of cattle is still excess and the drought out west is forcing rancher to sell their cattle earlier than normal and receives has dropped 10%. With corn prices nearly doubled most of the feedlots are losing $300 or more per steer. (Fischer Farms doesn't purchase any corn, we use home raised corn & ryegrass silage in the pasture). Calf prices are dropping because the feedlots can't afford to pay for new calves entering their feedlots with $7.50 corn. (Fischer Farms is continuing to expand our heard by buying good breeding stock from Missouri this week at depressed prices. But it will be nearly 3 years until they produce a calf ready to harvest.)

Anyways, just thought I would give everyone some quick facts on what's going on in the meat markets.