For more than two decades, World Pork Expo (WPX) has kicked off the summer for those of us in the pork industry. It’s always fun and interesting to meet up with old and new friends alike. With the event slotted in the mid-point of the year, it’s a chance to gain some insight into the pork sector’s opportunities, challenges and plans. It’s also a good time to measure the overall temperature of those raising the pork that feeds the world as well as those who provide the industry's goods and services.
It is amazing what sunny, temperate, non-humid weather will do for people’s spirits. Typically early June’s unsettled weather patterns feature temperatures that are too hot or too cool, and at some point during the three-day stretch it brews up a storm. This year, the weather was just right.
Of course weather that people prefer is not always what’s best for young and growing crops. Driving from the west across Iowa, I found crops to be smaller than expected. While the early and record-setting warm spring allowed planters to roll along quickly and well ahead of schedule, a dry May for much of the Corn Belt slowed corn’s growth progress, a bit less so for soybeans. This week’s USDA Crop Progress report dropped the corn rating to 66 percent “good to excellent.” That compares to 77 percent last year and the 10-year average of 69 percent. Soybeans also lost ground, moving from 65 percent to 60 percent “good to excellent” in a week.
Sure, most of the growing season lies ahead, but most places are trying to recoup a moisture deficit that started last fall and didn’t improve through a nearly snow-less winter. The National Weather Service shows most of the Corn Belt is 1 to 2 inches short of rain over the past few weeks. The growing crop’s moisture demands will increase in the weeks ahead.
USDA still has its yield estimate pegged at 166 bushels per acre, increasingly the trade is thinking along the lines of 162 bushels. The point of real concern for supply, demand and carryover issues is 155 bushels. Soybeans are a whole other story, even with good growing weather, supplies will be tight, and soybean meal prices high.
All in all, pork producers have caught a bit of a break on feed costs, and that always lifts their spirits. Add in a long-awaited downturn in market hog numbers, and producer profitability has improved, actually doubled in a week. Whether that will last a couple weeks, a month or two has yet to play out, but for now producers are claiming $20-per-head profits, versus the $10 of the recent past and certainly more than the $4 to $5 projected for this fall. Depending on their risk management strategies and abilities, any given producer could be doing much better or worse.