The USDA stunned the commodity markets Wednesday with a report showing corn production was 5 percent lower than the 2009 harvest and that corn stocks are 8 percent lower than in November, says a Des Moines Register report. For pork producers, the news means further upward pressure on corn prices and increased pressure on profit margins.

Corn for March delivery reached a two-year high of $6.31 per bushel on the Chicago Board of Trade, up 24 cents. Soybeans, also hit with a lower-than-expected supply report, soared 58 cents per bushel to $14.09.

The smaller-than-expected harvest has sent grain prices to their highest levels in two years, raising fears that the higher prices will push up food prices.

While hog prices have risen 30 percent in the last year, ham and pork chop prices have risen by 7 to 10 percent, according to figures from the U.S. Department of Labor. But meat may become more expensive in 2011.

"The price of pork is going to have to go up. You're going to feel that at the grocery store," said Sam Carney of Adair, president of the National Pork Producers Council.

Hogs for February delivery rose $1.15 per hundredweight to $81.12. Traders marveled at the rare occurrence of grain and livestock prices running parallel rather than in opposition.

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Source: PORK magazine, Des Moines Register