Florence Chases Hogs to Higher Levels
As Hurricane Florence bore down on the Carolinas, millions were at risk from wind, storm surge, and flooding, causing many to seek higher ground.
Meanwhile, North Carolina hog farmers faced a unique challenge: keeping nearly 9 million hogs safe. North Carolina is the United States’ second-largest hog producer, making about 15% of U.S. pork. Some farmers are moving the animals to higher ground, while others are preparing for power outages and shortages of grain to feed the hogs.
Another concern is that heavy rainfall could cause waste-filled lagoons on hog farms to overflow, creating an environmental hazard.
Aside from immediate risk to the animals during the storm, damage to infrastructure could keep slaughterhouses closed, creating a short-term backlog of hogs coupled with a pork shortage.
On Monday, December hog futures contracts blew to a two-month high as storm fears surged, only to retrace slightly during the week as the storm weakened slightly. Markets traded for 57 cents per pound on Friday.
Other markets that could be affected by Hurricane Florence include cotton (7% of U.S. cotton is grown in the Carolinas) and especially tobacco, as North Carolina is the largest tobacco-growing state.
**Big Crops Yield Low Prices
On Wednesday, the U.S. Department of Agriculture announced its updated estimate of this year’s corn and soybean crops, projecting larger harvests of both commodities.
The USDA is now projecting record-high corn and soybean yields of 181.3 and 52.8 bushels per acre, respectively. If those figures hold, U.S. farmers will be harvesting the second-largest corn crop and the largest soybean crop in history, nearly 10% higher than last year’s harvest.
This news sent both markets to new low levels, with December corn futures breaking under $3.50 per bushel, and November soybeans nearing $8.20 in the aftermath of the report.
Farmers are still holding onto hope that the trade dispute with China will be resolved, bringing the world’s biggest soybean buyer back U.S. markets. Even if trade doesn’t come back this year, the farmers are still expecting to get a significant bailout check from the U.S. government for their soybeans in the form of trade support, but payments for corn will be negligible, leaving many producers trapped with a crop that could lose them money if they didn’t lock in higher prices earlier this year.
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