LAKEWOOD, Colo. — Iowa State University estimated returns for a farrow-to-finish hog operation posted a $21.36 per head profit for the month of February, the most recent month available. February’s returns were a $15.73 per head rise from the prior year and a $24.24 per head jump from the prior month’s returns. The rise in profitability came from a higher selling price of $92.05 per cwt for February, which is an 18% increase over the prior month and 23% above last year.
Although profitability rose in February, so did total feed costs which were $109.08 per head, a 16.8% increase from last year. Costs for corn feed rose $14.97 per head (35.7%) from last year and accounted for 52% of total feed costs compared to just 45% in 2021. Soybean meal and dried distiller grain costs both fell slightly from last year by about 2% and 3%, respectively and accounted for about 16% and 12% of total feed costs for the month.
Given the geopolitical issues and uncertainty surrounding global food supplies in the near term, feed costs are expected to remain elevated, especially for corn. LMIC is expecting the national weighted average corn price for the 2021/22 marketing year to be $5.70 per bushel (up 26%) and $6 per bushel for marketing year 2022/23 (up 5%). Rising corn costs could be a headwind to profitability for farrow-to-finish operations because corn has accounted for over half of the total feed costs for the last nine months.
Soybean meal has accounted for about 16% of total feed costs for the last eight months. LMIC expects soybean prices to average $12.75 and $13.50 per bushel, respectively, for the 2021/22 and 2022/23 marketing years, increases of 12% and 6%. The higher forecasted soybean prices could lead to an increase in soybean meal feed costs.
The base slaughter hog weighted average national carcass price has been on a strong upward trend since the start of the year. Last week’s price was $98.24 per cwt, a 29.9% ($22.61) increase from the start of the year and 7.3% above the same week last year. Typically, the seasonal pattern is for prices to peak during the summer which also coincides with when profitability reaches its highest point of the year. The current breakeven price is about $87 per cwt, indicating that producers will likely see profitable months ahead barring any steep downturns in hog prices or spikes in feed costs in the near term.
— Livestock Marketing Information Center