Editor’s note: The following was written by Michael Langemeier, Purdue University Center for Commercial Agriculture, for the University of Illinois Farmdoc Daily website April 10.
The USDA-NASS Prospective Plantings report indicated that corn planted for all purposes was estimated at 92.8 million acres, up 4% from last year. Soybean planted acres were estimated at 84.6 million acres, down 5% from last year.
Though these estimates could change between now and when the crops are actually planted, it is still interesting to examine the impact of these estimates and associated crop prices on feed cost.
Specifically, what are the implications of these planted acres on the prospects for swine feed costs the rest of this year?
This article examines trends in feed costs as well as the impact of corn and soybean meal prices on feed costs for farrow-to-finish and swine finishing operations. It is important to note that the swine finishing enterprise represented in this article assumes the finishing of an early-weaned pig. The rations for the farrow-to-finish and swine finishing enterprises consist of corn, soybean meal, dry distillers’ grain and supplements.
Corn and soybean meal prices
Corn price averaged $2.18 per bushel from 2000 to 2006, and $4.56 per bushel from 2007 to the current month. Soybean meal price averaged $187 per ton from 2000 to 2006, and $355 per ton from 2007 to the current month.
Corn price was above $4.56 from February 2008 to September 2008, from November 2010 to September 2013, and from March 2014 to June 2014.
Since July 2014, corn price has been below $4.56 per bushel. Soybean meal price was above $355 per ton in June and July of 2008, from May 2009 to September 2009, in January and February of 2011, from March 2012 to March 2015, in July and August of 2015, from May to July in 2016, and from February 2018 to May 2018.
Both corn and soybean meal prices are expected to remain below their averages since 2007 for the rest of this year.
For monthly farrow-to-finish feed cost indices, 2018 has an index of 100. As with corn and soybean meal prices, a distinction is made for feed cost indices before and after 2007. The average index from 2000 to 2006 was approximately 58 while the average index since the beginning of 2007 was approximately 115. The index for March 2019 was 98, so current feed costs are 2% below the average for 2018. Projected monthly indices range from 98 to 100 for the rest of 2019.
Swine finishing enterprise
The latest full year of swine finishing cost indices, 2018, has an index of 100. The average index for the 2000 to 2006 period was 57, while the average index for the period beginning in 2007 was 112. The index for March 2019 was 98, so current feed costs are 2% below the average for 2018. Projected monthly indices range from 98 to 100 for the rest of 2019.
Feed costs are very sensitive to changes in corn and soybean meal prices. Regression analysis was used to examine the relationship between swine finishing feed cost and corn and soybean meal prices during the January 2007 to December 2018 time period. Results are as follows: each 0.10 increase in corn prices increases feed cost per cwt. by 44 cents, and each $10 increase in soybean meal prices increases feed cost per cwt. by 32 cents.
Obviously, a 40-cent increase or decrease in corn price would have a large impact on feed cost per cwt.
Current feed cost is approximately $30.75 per cwt. For corn prices ranging from $3.25 to $4.25 per bushel and soybean meal prices ranging from $250 to $350 per ton, at the lower range of prices, feed cost per cwt. would be approximately $26.25. At the higher range of prices, feed cost per cwt. would be approximately $33.75.