A new economic climate versus last year

Yesterday I was at a production site working with production supervisors for a production system. While they spend every working day in production facilities directing the care of pigs and making individual pig marketing decisions, the supervisors really had not thought about the impact of today’s market prices on their contract producers.

Yesterday the reported net carcass price for all federally inspected barrows and gilts slaughtered in the US was $128.63/cwt (USDA LM_HG201). With an average carcass weight of 212.47 lb, the net value of every carcass averaged $273.30, a new record – again.

Once we thought about the ‘value’ of each market animal, it led to a discussion of producers risks in the event of a ventilation failure or other cause of a catastrophic pig loss in a production facility. I’ve written about this in previous blogs but it bears repeating – there is a lot of money at risk in each of our production facilities today and everyone involved in pork production needs to be aware of both the financial risks and the means to reduce the risks of catastrophic losses. With so much value in every pig, in the event of a loss someone somewhere will have to absorb the loss.

On the other hand, corn and soybean meal continue their declines to values that last year were only dreams. Last year at this time with the prospect of a ‘decent’ corn crop corn prices began their decent from the $6-8/bu range. This morning local bids in the Mankato, MN area were $3.53-3.61/bu. USDA reported local Minnesota cash bids as low as $2.99 yesterday.

In addition, because of the Chinese refusal to accept DDGS deliveries due to GMO trade issues and regional rail shipment delays due to the oil boom in North Dakota, DDGS in the western corn belt is quoted this morning at $115.60/ton for Minnesota plants, $107.25 for South Dakota plants and $120 for western Iowa plants. Contrast this with $140 for eastern Iowa locations, $155 for Illinois and $145 for Indiana sources.

I doubt if very much corn is being delivered at the bid prices this morning in this region. However, producers are taking a hard look at upping the amounts of DDGS in their diets once again as our regional prices once again give us a cost of gain production advantage.

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