By TIM ALEXANDER

Illinois Correspondent

PEORIA, Ill. — The 2008 Illinois Pork Expo was jam-packed with seminars and guest speakers, but perhaps none were as straightforward as University of Missouri-Columbia market expert Ron Plain.


“It’s going to be a tough year, folks,” he told several dozen pork producers who gathered for his market outlook seminar on Feb. 5 at the Peoria Civic Center Exhibition Hall, “and I don’t have much good news to tell you there.”


Plain told the producers they should get used to high feed prices spiked by corn in the $5 per bushel range. “Unfortunately, this time around in the hog cycle, we got caught with a lot of hogs and low prices when feed prices went up,” he said. “There’s a lot of red ink out there.”


Plain pointed to the cycle of high crude oil prices driving agricultural commodity prices, saying the two would be linked for the foreseeable future. United States ethanol production has increased every year except for 1996, when gasoline prices were as low as $1.28 per gallon.


“I don’t think there is any $1.28 gasoline in our future, and I don’t think $5 per bushel corn is going to slow this thing down at all,” Plain said.


The U.S. should have little problem reaching the government-mandated 15 billion gallon per year mark for grain ethanol production by 2015, thanks to the number of new ethanol plants under construction or in planning. Because of that and other factors, livestock producers can expect feed shortages and high costs for the next several years, according to Plain.
“Five-and-a-half billion bushels of corn every year will be used for ethanol, which reduces the amount available to do strange things like feeding pigs,” Plain stated.


He added at the current rate of ethanol plant construction in the U.S., the mandated 15 billion gallon figure could be attained in advance of the deadline.


“If you figure in the plants already under construction, it will bring the total U.S. capacity to 13 million bushels. We won’t need to build very many more plants for grain ethanol,” he said.
Plain predicted crude oil prices will settle in for the long haul at around $80-$90 per barrel, with consumer prices for gasoline remaining in the $3 per gallon range. If corn prices surge to more than $5 per bushel, Plain said, demand for ethanol will wane and plant construction will grind to a halt, with shutdowns of operational plants possible.


“Five dollars is the number we ought to get used to for corn prices,” Plain predicted.


Plain’s was one of nearly two dozen seminars on subjects important to pork producers offered during the 2008 Illinois Pork Expo, which ran through Feb. 6.