Feed costs and slaughter barrow and gilt prices are most sensitive components to profitability calculations.

April 24, 2019

2 Min Read
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Iowa/Minnesota barrow and gilt prices have plateaued in the last two weeks holding just above $76/cwt., but this has not been the case for feeder pig prices, which have surged counter-seasonally higher, according to the Livestock Marketing Information Center (LMIC). Early-weaned piglets (10-12 lb.) have climbed nationally more than $17 per head in the last five weeks, and 40 lb. pigs have surged $30 per head in that same time frame.

Iowa State University, using the 40 lb. feeder pig price as an input, recently released its feeder-to-finish profitability estimate. The March return was estimated $4.59 per head based on a 40 lb. feeder pig purchase price of $49.73 per head back in November 2018.

“Feeder pigs bought today are expected to be marketed in August of this year. The cost of the feeder pig alone has doubled in value to $100.17 per head for the first week of April. If no other costs changed from March estimated return calculations, that would place breakeven prices just over $88/cwt. on a dressed basis for feeder-to-finish operations,” LMIC noted. early weaned pigs LMIC FDS.jpg

August lean hog futures are were above that projected breakeven level, suggesting profits of over $10/cwt.

“Feed costs and slaughter barrow and gilt prices are the most sensitive components to these profitability calculations, and both are more uncertain than normal,” LMIC said.

The seasonality of corn prices would suggest higher corn prices in April and May and much lower prices in the late summer, LMIC explained. On the soybean meal side, LMIC said central Illinois soybean meal prices were very volatile in 2018, with the highest prices of the year seen in April and May.

According to LMIC, flooding in the Midwest and slow fieldwork could make the feed market very volatile during the growout phase for these feeder pigs.

LMIC also noted that slaughter barrow and gilt prices on the futures market remain high based on the assumption that retaliatory tariffs on U.S. pork will soon be removed and on surging Chinese demand for products from Europe, Brazil, Canada and the U.S. due to the African swine fever outbreak endemic in China.

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