Hogs: Last night we showed the chart of seasonal hog prices. Let’s expand on that a little and discuss ideas for the next few weeks. The overall trend for hog prices from summer into winter is almost straight down. This is due to the increase in pork production. Last week and this week we have seen producers bring in more hogs than expected. They are cutting down on planned feeding periods in order to minimize $8 corn feeding.
Cattle: Theoretically, the market that will show the first reaction to high corn prices will be chicken. It has the shortest turnaround between a change in profitability and a change in actual production. As you can see, the premium end of the chicken market has shown some life. In June prices were 11% higher than last year. Now they are 18% higher. Being realistic, don’t expect chicken producers to nimbly reduce production. Egg sets in the latest week are only 1% lower than last year. Chicken producers typically need one, if not two, full quarters of actual profit losses before they reduce production. When that happens, this will provide an even better underlying support to beef. On the short term news end for beef we will note wholesale beef prices have been mixed for two days now. The seasonal purchase for Labor Day is over.