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DAVID KRUSE

By Staff | Jan 8, 2010

Twenty-four inches of snow from one winter weather event is the most accumulation that I have ever seen in my 57 years in northwest Iowa.

I suppose that we have the El Nino winter to thank for our record snow event. The El Nino prompts warmer-than-normal winter temps in the northern Corn Belt.

Warm air holds more moisture than cold air so larger snows develop. I was surprised at the size of the snowflakes. My grandmother once told me “big snow, little snow,” meaning that the bigger the flakes, the smaller the accumulation. Not this time.

The flakes were huge. While the weather service called the Christmas snow event a blizzard; it wasn’t where we live. It wasn’t cold and it didn’t blow. It just snowed and snowed and snowed.

We now have conditions that could produce a blizzard anytime the wind does blow. We don’t have big snow drifts yet, but I suspect that we will have. Those with corn left unharvested are not going to be able to harvest in two foot of snow. The corn harvest will resume in the spring.

We have not had a good blizzard here since the 1970s. I was on the farm in 1975 with a hundred head of calves. Snow blasted horizontally for two to three days. Thousands of cattle were lost in unprotected conditions.

The worst blizzard that I experienced was March 3 to 6, 1979. I remember the day because my son, Matthew who now farms in Brazil, was born March 3. We barely made it into Hartley driving through whiteouts passing semi-trucks on U.S. Highway 18.

After reaching the hospital, I was stuck in Hartley for three nights. I was eventually able to make it to the corner on the blacktop to the gravel road to our farm place, but had to literally crawl the last 1/4 mile through snowdrifts too soft to support walking on.

I had cattle on two places so had to get plowed out. I got a county payloader working to open my road. It took 2 1/2 hours to open one lane 1/4 mile. I can remember after finally getting the cattle fed, collapsing, exhausted. There was so much snow, the country roads became tunnels.

They couldn’t get all the snow off the roads so when it melted that spring, the bottom fell out and we had a muddy quagmire. We traveled from the farmstead to blacktop by tractors through the mud. That blizzard was March 3 so it was not long until spring when it melted. The 24 inches that we got over Christmas 2009 is going to be with us a lot longer, like all winter, along with all the rest of the snow that we get. We had our subsoil moisture reserves replenished with rain in October.

The ground is nearly full so all the snow that we get is going to have to drain down creeks and streams next spring when it melts. In other words, mud and flooding next spring is unavoidable.

In other news, the USDA released the December hog and pigs report Dec. 30 (see full summary of the report on page 2B).

It looks like the hog industry is planning to work for its bankers next year. They may not lose as much money as they have been losing, but supply and demand is unlikely to generate the kind of profits needed in order to fill in the deep hole that’s been dug.

The industry has lost $5.4 billion and nobody has cried “uncle.”

A 3 percent reduction in the breeding herd isn’t substantial. Productivity gains make up for some fewer sows so that market hog numbers are only down 2 percent from a year ago.

Farrowing intentions were 98 percent as the industry works the remaining breeding herd harder. The December hog report didn’t miss trade expectations by far, but neither trade estimates nor the report was what the industry needed in order to moderate supply.

Hog producers are hanging on another year and as long as they can pay the interest on their debt, bankers will opt to let them produce. Hog facilities aren’t worth much so if 2010 cash flow is neutral, producers will be allowed to stay in business another year.

When the “last man standing” contest began the expectation of serious producers was that they could lose money longer than their neighbors.

The neighbors were supposed to go broke and quit and then the hog market would rebound sharply, enriching producers that toughed out the cycle.

It isn’t working.

Industry equity was too evenly distributed. The industry was tied into contracts to produce until they literally went broke. Nobody has quit voluntarily and bankers haven’t begun involuntary liquidations on a large scale yet.

Continued loses producing an Armageddon washout is one scenario. Another scenario is that after $5.4 billion in losses producers have financially become the walking dead, forced to find new equity to keep breathing.

The liquidation done is not enough to lift the hog market to sustained profitability and producers are suspended in economic purgatory. Instead of a relatively quick resolution of who survives the hog cycle, we get a protracted stalemate.

Low pork prices give retailers the incentive to feature the product and recent indicators are that both domestic and export demand are improving.

The winners are the retailers and consumers. Pork is a bargain and the hog report suggests that it will continue to be.

The strengthening of the demand base would help prices rally if supply was ever moderated.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

I moved from the house to the barn using a scoop shovel in front of my face for protection. It would have been easy to become disoriented in the storm. I threw bales of hay out of the haymow into the storm which the cattle devoured, strings and all. I was fortunate that all of my calves survived.

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