News

Margins tighten for swine producers as feed prices climb

Profit margins are tightening for swine producers as corn and soybean prices improve.

Michael Langemeier at Purdue University says recent market strength, especially in soybean meal, has driven up hog finishing costs.

“If it looks like there’s a chance to price some corn or soybean meal in the fall at an attractive rate, go ahead and try to do that.  Because even though we have fairly large supplies of corn and soybeans, I think this recent run-up tells us that it doesn’t take much of a hiccup in world production for prices to jump quite a bit.”

He tells Brownfield volatility is the watch-word heading into the 2018 U.S. growing season.

“Corn prices later in 2018 are both above $4 dollars.  That’s certainly higher than we’ve seen recently.  There’s a possibility that could be quite a bit lower if we had a big crop (with) downside potential for corn.  But there’s also some upside potential if we continue to have very strong soybean plantings.”

He says the prospects of variability are even higher for soybeans this year.

Overall, Langemeier expects feed costs for swine finishers to be up 7 percent compared to 2017.