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Alton, Ia | Go out to the shop, put your hand in a vise and crank on it. Leave it there for HOURS. Then you'll get an idea of what the economics of livestock can be like. The forecast for the next 12 months is a loss of $25 per head on average. Get's really ugly in Q4 2018, but they're really not a heck of a lot better in Q1, 2 or 3 2019. And if you have a contract, you'll have to take them regardless of the profit or lack thereof. Maybe we'll get a rally, and maybe be able to lock in some profit, or at least break even sometime soon. Or maybe not.
Maybe someday there will be opportunities in hog production like there used to be, but frankly, sitting here today, I don't see it. I already listed how crappy the market is, but when I drive into town, (Le Mars, IA) there is a guy assembling feed bins for future hog barns at the old JD dealer building. Probably 3-4 acres of feed bins already assembled and he told me he's worried he won't be able to supply all his orders. That's flipping nuts. There are too many hogs born these days totally disconnected to the open market profit offered, thus there is no incentive to decrease supply when the price tanks. The only saving grace current producers have is they may have been able to forward sell or hedge, there was good profit offered as recently as Feb or so. But what's going to happen going forward?
So, frankly, at this stage in the hog cycle, with the uncertainty of exports, and the continued consolidation, I think you'd be far better off taking any spare cash you have and blowing it on fine whiskey and cheap women. Be a lot more fun, that's for damn sure. | |
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Getting into Hogs?
