Hog Producers Should Go Long Cash Corn

CHICAGO - Jul 11/06 - SNS -- Hog producers and other livestock feeders who use corn should be accumulating stocks on cash markets, argues Chris Hurt, Extension Economist, Purdue University.

"It may be time to fill every inch of space with corn as the last of the relatively cheap corn may be available late this summer and fall. With ending stocks of over 2.0 billion bushels, basis levels should be weak and futures premiums for next spring and summer are large. This means that ownership of cash corn from now through harvest will likely pay handsome dividends for hog producers."

Feed ingredient costs is one of two major threats facing hog producers in the United States this season, Hurt argues. The other is the potential loss of export markets as Asian beef markets reopen.

"The larger of these two is clearly corn price uncertainty. Current forecast for above normal temperatures and below normal precipitation for the mid-July pollination period are of concern. In addition, rising corn utilization for ethanol means a close-to-normal crop is needed to avoid some price rationing in coming months."

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