The light at the end of the tunnel for cattle and hog producers appears to have changed from a train to small ray of hope. It’s no consolation for producers exiting prematurely or involuntarily for various reasons.

However, Jim Long, President of Genesus Genetics lists a couple of ‘I Told-You-So’s in his most recent pork commentary that I happen to agree with. The first one has to do with the latest US Corn Estimate, which Long says is positive for hog cost of production.

Long writes in the third week of August, “You remember about 6 weeks a

go the usual suspect wizards were projecting a disaster with the U.S. corn crop. Corn Futures reached $7.50 per bushel and the wizards were talking ten dollars. About 4 weeks ago, we took a 3000-mile Midwest road trip and reported to you we saw an excellent crop. The USDA came out with a revised corn production estimate. Lo and behold, the corn crop estimate is up 570 million bushels from July’s estimate. Is it any wonder corn is two dollar a bushel less then a few weeks ago? A two-dollar a bushel decrease has lowered the cost of production $20.00 plus per head.”

Long expects lower corn demand due to decreased livestock and poultry production, domestically and globally. The U.S. dollar is increasing in value, and the large corn crop will push corn this fall below $4.00 a bushel at the farm level.

It almost looks like the ‘Perfect Storm’ scenario is playing itself out again, but almost like Storm Faye in Florida; changing direction and going the other way. The ‘Perfect Storm’ often sited for the cause of all evils in the hog industry included rising feed prices, the weak U.S. dollar, and lower hog prices.

Long writes for the record, the USDA estimates the corn crop at 12.288 billion bushels, the second largest ever. Also, Europe’s grain production is up 15 percent, Canada’s wheat is up 20 percent, and Australia’s wheat is up 50 percent. “High prices will always increase production in any commodity,” he said..

There’s also a little room for optimism in the cattle business. Randy Tkachyk of Sundown in southeastern Manitoba is a cow calf producer but also manages the Grunthal Auction Mart.

Tkachyk write in a recent email to me, “I never expected this to happen! The prices for cull cows and bulls have shot up significantly at the Grunthal Auction Mart over the last three months,” says Tkachyk. “I’ve not seen prices like this since before the BSE crisis hit in May of 2003. Well it is about time!”

He said the age verified bulls able to cross into the USA are fetching higher prices, while older bulls that can’t cross the border, much less. He’s seeing more cattle producers’ age verifying their cattle and supplying birth certificates.

“If producer’s age verify their animals and are young enough to go to the USA, they will bring higher dollars for the producers,” he said.

“It is positive news the price of corn and the Canadian dollar is declining. This should mean more money to cattle producers selling calves this fall,” said Tkachyk.

A real positive for the hog industry writes Jim Long is U.S. pork exports in June were up 113 percent from June last year. U.S. pork exports were up 58.5 percent in the first 6 months (January-June) compared to a year ago. Net exports of pork are 17.82 percent in 2008, up from 9.25 percent in 2007. Simple arithmetic, last year 1 in 10 hogs net exported, this year almost 2 of 10. You need to look no further than this huge leap in exports to see why despite 9 percent more hogs going to market year over year, we have prices twenty dollars plus per head higher.

Lets hope the ‘Perfect Storm’ doesn’t change directions, again, anytime soon.