Feed grain prices – always changing

After last week’s USDA WASDE grain report, the desire for producers to expand pork production took another step backwards. What started as a year where many expected feed grain prices to remain relatively low is rapidly turning into a year of rising feed grain prices as rains continue to plague Missouri and growing regions east of the Mississippi river.

In our local area, so far we’re on track for very good crops. Corn is tasseling everywhere and we have enough moisture to make it through pollination without any concerns. Yesterday’s very high dew points (75-80F) and temperatures (mid to upper 90’s) made for some heat index concerns, especially for growing pigs. However, to date the nights have cooled enough that I think everyone is expecting wonderful corn pollination in the next 2 weeks.

I think the very strong rise in feed grain prices has caught many off-guard. Several analyst’s that I follow have been commenting on the relative small amount of futures hedging in the next 8-12 months be pork producers. This suggests that at least on the income side (sale of pigs), producers have chosen to take their risks with the cash market. It is not clear how many have hedged their feed grain expenses.

Local corn bids this morning by 2 major suppliers of complete feeds to the pig industry in the region ranged from $3.87 to $4.10/bu. Hipro soybean meal at the processing plant is running around $365/ton. Both of these are up considerably in the past 30 days. This price swing has added about $5/cwt live weight gain to production costs.

At the same time, the price of DDGS relative to corn continues to decline. USDA lists Minnesota DDGS (10% moisture) at an average price of $130/ton this morning. This works out to 91% of the price of corn at $4/bu. Depending on the quality of the DDGS (as expressed in the oil content), it looks like DDGS will begin pricing back into diets where it had been removed for the past months.

Leave a Reply

Your email address will not be published. Required fields are marked *