|Lean-hog and live-cattle future prices |
per pound (WSJ graphic)
"The figure illustrates how producers responded to lofty prices and profitable margins at the start of the summer by breeding more animals—before a sharp drop in prices to multiyear lows reversed the economics for many farmers," Gee writes. "Part of the problem is livestock’s biological limits: a sow, or female breeding pig, gestates for around four months before delivering a litter of pigs. Market conditions can change drastically from the time a farmer decides to expand operations to when those animals are ready for market."
There is also concern about beef prices, Gee writes. The Chicago Mercantile Exchange showed that live-cattle futures for October increased 0.03 percent, to 98.925 cents per pound, up from a low of 97.35 cents in early trading, the lowest since November 2010. "In the week through Oct. 1, meatpackers produced 509.1 million pounds of beef, up 5.5 percent from the year-earlier period. Output has climbed 4.7 percent in 2016 over the volume produced by this time last year." (Read more)