Due to extremely tight stocks, Paragon Economics President Steve Meyer sees more upside potential in the corn market:
“Any hiccup here on planning, we could see $9.00 corn here easily, on the old crop stuff, and so I would get something covered, if nothing else I would get come call options bought that might protect me somewhat from $8.00 plus corn. I know it’s not cheap, but that possibility is there.”
Record high feed costs have pushed the cost of pork production to record levels. Meyer is encouraging producers to have that feed supply on hand as late summer approaches:
“If you get into August and don’t have corn on hand, or know where it is for sure, close, you may be driving a long ways or paying a lot of freight to get it there and then you’re going to be over a barrel. So, I would certainly have my late season corn in a bin somewhere and then back on the market hand-to-mouth and I would try to be booking that as well. As someone pointed out you can’t feed them paper. So, you might actually have the price managed but if you can’t find the corn, you’re going to be in trouble. And I think there are going to be some place where you can’t get corn very readily in August.”
Domestic pork demand remains strong. So far, Meyer says there has been no pushback from the retail sector:
“Part of it is, the alternative is beef, and it’s pretty expensive. Now, chicken is pretty inexpensive right now, and they’re not cutting back to any degree on chicken output right now. If there’s something that’s probably going to put a damper on retail prices, I think it’s going to be alternative price of chicken and gasoline prices that may take some dollars out of consumers’ pockets. So, I am a little concerned about it, but, we haven’t seen much yet.”
President of Paragon Economics, Steve Meyer.