LAKEWOOD, Colo. — Iowa State University estimated returns for a farrow-to-finish hog operation were $57.60 per head for the month of May, the highest since October 2014 and a more than five-fold increase over last year.
Although profitability is the highest in nearly seven years, there has also been a rise in feed costs to $107.61 per head, a level not seen in almost eight years. The May estimated returns showed that nearly half (49.2%) of the total feed costs was corn at $52.91 per head. Soybean meal and dried distiller grain accounted for 18.2% and 13.5% of total feed costs, respectively, at $19.54 and 14.54 per head. The five-year monthly average cost (2015-19) for corn, soybean meal, and dried distiller grain have been about $32, $15, and $9 per head, respectively.
Omaha corn prices have been averaging around $7.00 per bushel for about the last two months which is well above the five-year average of roughly $3.80. Central Illinois soybean meal prices have been around $400 per ton the last few weeks and a level that is a low for the year but still well above the five-year average of about $340. Corn and soybean meal prices will often decline during the second half of the year, but both have been holding strong since the start of the year. The rise in feed costs this year have become a growing concern for producers.
The farrow-to-finish breakeven carcass selling price was $82.75 per cwt in May, the highest breakeven price since October 2013 and a reflection of the rise in feed costs. The base slaughter hog price (national, weighted average carcass) was $113.12 per cwt last week, up 75.5% ($48.65) from the start of the year and prices have yet to reach a peak value. As hog prices have risen so has the pork cutout value, which was $134.13 per cwt, up 70.3% ($55.35) since the start of the year and above the pandemic high of $115.12 that occurred almost a year ago.
In 2021, meat demand has been remaining strong and will likely do so through the July 4th holiday season which should help support hog and pork prices, but feed costs will likely continue to be a headwind to profitability in the near term.
— Livestock Marketing Information Center