If you want to see the impact of $5 corn, just look at the hog markets.

On the Chicago Board of Trade, hogs for December delivery have dropped from $79 per hundredweight in August to $65 this week, notes a Des Moines Register blog. That reflects a good supply of heavier hogs and commercial freezers stocked with supplies going into the November/December holiday period.

Pork producers have been happy to sell at prices in the mid-$60s, which are down from a year high of $79 per hundredweight in August, because most of those hogs were fed with corn that cost under $4 per bushel.

But look ahead to the futures prices for next June and July, which reflect the supply picture from the winter farrowing season and the subsequent 5.5 month growing period for hogs before slaughter, and the picture is different.

For both June and July deliveries, hog prices stand at $85 per hundredweight, up some $5 from the last month.

The price of corn, meanwhile, has shot up from $3.50 per bushel to $5.80 per bushel since June on fears that the U.S. crop will be short and international demand will be long.

The higher price for June and July hogs reflects the conviction among traders that there may be fewer hogs than usual during the winter farrowing season when they have to feed the animals corn that is priced close to $6 per bushel.

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Source: Des Moines Register