The surging price of corn futures - which allow farmers to lock in the price of the grain for an extended period - means few farmers are expanding their herds, Bloomberg News reported. Meat prices have risen 14% this year, driving up U.S. retail costs, and the rally is not over yet.
"If grain prices go up, then meat prices are going to have to move up," Mark Greenwood, who oversees $1 billion in loans and leases to the hog industry for AgStar Financial Services Inc, told Bloomberg News. Corn costs "tempered any enthusiasm there was on expansion," he said.
Farmers often use corn as a feedstuff for animals.
Corn and wheat have risen by as much as 40% in the three months to September. Hot, wet weather hurt U.S. crops, while drought destroyed huge areas of crops in Russia and Europe.