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Community Manager
Jeff_a_Caldwell
Posts: 979
Registered: ‎04-29-2010
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Hogs & $7 corn?

So, what do you think of this? Think Chris Hurt's right? More importantly, is it possible?

 

"For the 2013/14 corn marketing year, hogs are offering an estimated $6.85 per bushel if the profits from hog production are assigned to the value of corn." 

 

Here are a few more of his comments. Interesting stuff. Definitely a healthy picture for the hog business! So, who's throwin' up a new hog building right now?! 

 

JC

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Jeff Caldwell
Agriculture.com Multimedia Editor
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Esteemed Advisor
sw363535
Posts: 4,540
Registered: ‎07-18-2011
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Re: Hogs & $7 corn?

Jeff -------- am running cost sheet to check but I think it is accurate if you leave out a few management expenses then absolutely.

 

If this is accurate what are cattle paying for corn?  Not feeders ---------- Cattle owned from birth to rail. ----------- What $ corn price is that paying?????

sw
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time:thetippingpoint
Posts: 556
Registered: ‎05-20-2010
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Re: Hogs & $7 corn?

Pretty easy math. Of course, the basis from the futures prices in hogs is impossible to take advantage of, so just take $8 a cwt off the futures. (ie cash is about $7 under dec futures, yet we had to ship the hogs, so a 88 hedge would be an 81 net, you can't store on the hoof until the day of cash settlement.) This takes away about $1 of his price. Plus you need to include the fact that the building has a negative value the day it is built (you have to bury it someday).

 

Whose building a hog barn now?   Only a mentally challenged group with no knowledge of history.

 

Just like you should never buy inputs when you sell grain, you should never build hog barns when you are finally making money raising hogs. Simple rules, mostly ignored. Everyone else has gone broke running Smithfield. Time for the chinamen to contribute to the cause.:smileywink:

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hardnox604008
Posts: 5,518
Registered: ‎05-14-2010
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Re: Hogs & $7 corn?

Seems fairly normal that for the (old days) corn/hog guy, the value of high priced corn tended to flow through in the following year. The durn things just smelled in the first year.

 

BTW, the hog business isn much less transparent than it once was. What's going on with PEDV?

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason."

J.K. Galbraith
Senior Contributor
hanktbd
Posts: 235
Registered: ‎01-08-2013
0

Re: Hogs & $7 corn?

Back in the 60's, my dad's rule of thunb for any 3 year period was corn makes money one year, hogs make money the next year, and year three we live off of our depreciation. No idea how the hog thing works these days with the demise of free market competiton for finished hogs.

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time:thetippingpoint
Posts: 556
Registered: ‎05-20-2010

Re: Hogs & $7 corn?

Great thoughts from your Dad hank. At the end of 30 inflationary cycles, it seems like it is 2 years for grains, 2 years for hogs, and 2 years for depr. :-)