Did anyone care much about this week’s Statistics Canada reported on what farmers seeded this spring?
Not really. The fat canola number got some attention, but even though this is usually a carefully parsed report, the wet and wild seeding conditions this year mean everyone is radically adjusting their expectations of what farmers actually got seeded, and how much of that has gotten flooded out or damaged beyond repair.
The report was based on a survey completed by June 3, and everyone knows the outlook for seeding and non-seeding has changed incredibly since then. So it’s a well-done survey that reveals what farmers were hoping to do three weeks ago, but not anything truly reflecting what they are actually doing.
I wonder how much of that uncertainty will apply to this afternoon USDA Quarterly Hogs and Pigs report. The weather isn’t as big a deal for hog production as it is for crops, obviously, but the corn/lean hogs spread is just as big a factor in determining whether farmers hold on to sows and breed them, and that spread has veered around dramatically this month – after the survey was done.
At the beginning of this chart both corn futures prices and lean hogs futures prices were trending together, giving hog farmers a neutral profitability outlook on their main equation. That’s probably when they were answering the survey. Right during the survey completion, the spread shot wide, with corn prices surging and hog prices slumping. That hammers hog profitability.
I wonder how this widening has affected farmers plans for hog production this summer and fall? Unfortunately, the survey won’t show most of that impact. Or the fact that the spread has gone the other way very recently.
As always, these reports give us a snapshot of what farmers were planning to do a few weeks go, but if weather conditions or the markets move dramatically in between the survey and its release, its relevance becomes quickly stale.
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