SE IA | OldMcdonald - 3/18/2014 08:59
Keep in mind it takes about 2.5x the amount of feed to get the same pound of gain in beef.
There's a reason for the spread. You need almost 3x the amount of land to feed the cattle. And that's just for finishing. Don't forget the pasture and other land requirments that you need for Cow/calf segment.
Sure, the barn and setup outlay is more expensive for hog finishing..
And If you think abou it, 85-90 cents - where the LH contracts were before PED makes 70 cents live. Using the 2.5x higher feed conversion rate, all other things being the same, gives you a Fat cattle price of 1.75. Factor in the discount for more expensive facilities to finish pigs, and 1.30'-140's for FC and 87 cent LH hogs was just about the right spread.
IF live hogs are the same price at live cattle, why would anyone continue to feed cattle which need almost 3x the feed for the same pound? I know the price is there because of PED, but that doesn't mean a ratio of 1:1 is warranted without it.
W/o PED, as Kookier explained perviously, the amout of profit in hogs at current prices is similar to $8 corn on paid ground. Surely that profit level would have the construction companies working around the clock to put up all the new hogs barns and conversion kits from cattle lots.
You are assuming that Pork=Beef. And pork does not equal beef. Hog prices are good, but this thing isn't going to last forever, look out to this hog market the minute that a PED vaccine is developed and actually works. Hog guys need it, and the difference about who comes out of this thing is who breaks with PED and who doesn't.
Edited by jocoshar23 3/19/2014 09:11
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june lh almost even with june cattle
