Ingredient price volatility and what it means for you

Posted on February 2, 2012 in Swine Performance
By Julie Salyer

We all know it – feed ingredient markets are in a constant state of flux.  Recent trends have led to some interesting circumstances we haven’t seen in quite some time.  Diligently monitoring prices helps us recognize challenges and opportunities for your swine nutrition program.  The altered price relationships may even temporarily change how swine diets should be formulated to maximize profitability. Corn prices decreased nearly $2 per bushel since September and many expect prices to stay lower through the first quarter.  Soybean meal (SBM) prices have also decreased and are expected to be lower year-over-year in 2012.  These changes in relative market costs have created some unusual price relationships among common swine feed ingredients. Soybean meal versus crystalline amino acids The costs of soybean meal have significantly decreased while crystalline amino acid prices have held relatively stable.  This has currently eliminated the economic incentive to formulate diets with high levels of supplemental amino acids.  In nearly all cases, adding L-Lysine HCl to diet formulas will maximize profitability.  Talk with your consultant about the specific strategy to use on your operation. DDGS versus corn and soybean meal The markets have just passed through a several-month period where prices of distiller’s dried grains with solubles (DDGS) remained quite high relative to corn and SBM prices.  In some cases, this actually caused the cost incentive for using DDGS to disappear.  Some production systems decreased DDGS inclusion levels while others dropped DDGS altogether.  More recently, DDGS market prices have decreased, bringing back the typical price relationships where it is again an economical alternative to use DDGS to replace a portion of the corn and soybean meal in swine diets. How do you determine the most economically optimal diet formulations? Your Vita Plus consultant has several computer tools to help estimate market hog feed costs when using different combinations and levels of ingredients in swine diets.  To maximize your profitability, we encourage you to evaluate the economics of various nutrition program alternatives on a routine basis.  Contact us if you’d like to compare formulation costs and feed costs per pig for your specific situation.  About the author:  Julie Salyer previously provided technical support for Vita Plus field and sales staff and conducted nursery research trials as a swine nutritionist.  Salyer received her bachelor’s degree at The Ohio State University and master’s degree in swine nutrition at Kansas State University.  She is originally from southwest Ohio, where she raised and showed livestock for the county 4-H fair. She was also a student worker at Ohio State’s swine farm and completed an internship in North Carolina for Murphy Brown LLC, which she says was instrumental to where she is today.  Salyer is active in church and enjoys hunting, kayaking, hiking and spending time with her husband, Brandon, and their two dogs.

Category: Feed costs
Feed ingredients
Markets and economics
Swine Performance