Corn prices: A guessing game
We’ve been hearing a lot of guesses about where corn prices will be this summer. Some say $3.50. Some say $9. The USDA reports that 96 million acres of corn will be planted in 2013. Jerry Gulke, president of the Gulke Group, an agribusiness research and marketing firm, says that if that acreage is planted and demand stays the same, a national corn yield average of 160 bushels will result in $3.50 per bushel. If yields average 150 bushels per acre, it will bump up that price to $4.25. If we only produce an average of 125 bushels per acre, the price could jump to $7.50. That’s a lot of “ifs.” As a hog producer, playing the guessing game isn’t the best use of your time. Instead, let’s focus on good management. First, evaluate your target market weights about once every quarter. Compare the price you’ll get per hog versus your feed costs for taking them to a higher weight. Pork consumption is highest in the summer with consumers firing up their grills. This usually means the heavier the pig, the better, but not always. It typically takes 5 to 10 bushels of corn to feed a finishing pig (five to six months) and 8 to 18 bushels (over a year) for a sow. This range depends upon diet formulation and use of alternative ingredients. Evaluate your local prices of distillers grains, wheat and wheat middlings, bakery product, and other byproducts. Don’t just look at them on a cost per ton basis, but also consider impacts on performance. Know your margins to be certain you’re using the best strategy. The prospect of cheap corn might make it tempting to not contract your corn, but I caution you on that strategy. You don’t want to be wrong. Contracting your prices brings certainty to your margins – and your profits. Now is also the time to check management in your barns. For example, look at your feeders and make sure you’re not wasting any feed. On the flip-side, minimize out-of-feed events as you lose performance when pigs aren’t eating and it’s really hard to make up for that. And, as the summer heats up, make sure you have adequate air movement through the barns. The less energy animals have to spend to stay cool, the more they have for growth. We can’t predict the markets any more than we can predict the weather. Let’s focus on what we can control: good management of our facilities and smart marketing choices. About the author: Brendan Corrigan is the Vita Plus swine business manager. Originally from Peoria, Ill., Corrigan graduated from the University of Illinois in 2000 with a bachelor’s degree in animal science. He continued on to receive his master’s in swine production and nutrition in 2002. He is a member of the American Society of Animal Science, is recognized as a Professional Animal Scientist, and will earn his master’s of business and science in 2014. Corrigan has 10 years of experience in the swine industry, with extensive research and hands-on experience in nursery, grow-finish, and sow production. He also has a firm understanding of business strategies and economic decisions in pork production. At Vita Plus, Corrigan guides the technical team in product development and nutritional formulation. He also works closely with sales staff to provide service and assist producers with difficult decisions.
Corn and soybeans