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Demand destruction
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Pat H
Posted 5/3/2021 12:36 (#8985032 - in reply to #8984966)
Subject: RE: Demand destruction


For now hog prices are high enough to work ok. Not so sure about cattle. Looks like plenty of wheat being fed. Gas prices are up so maybe ethanol is still hanging in there. However, these prices certainly get users looking at alternatives or slowing production (feed less cattle, do maintenance at ethanol plants, etc).

The last run up brought in alternative feed stuffs as standard in hogs. The guys I grow for have a whole facility dedicated to taking various by products and generating feed. It's not going to close down. Also there are the ddgs to feed. The result is less soymeal bought and a little less corn. I imagine every industry where grains are a significant cost have and will continue to develop alternatives.

One thing to consider is that when grains get cheap, the alternatives tend to get cheap as well. Not much drive to switch away as long as performance is good.
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