Managing market weights can have significant profit impacts
It wasn’t very long ago when it seemed pork producers couldn’t get pigs heavy enough because the base price was so good the marginal income over feed continued to drop profit into the bottom line.
Times have changed.
We are clearly in a different time of harder-to-achieve profits. If there are any positives in this time of depressed markets, it’s that feed prices have dropped significantly – and this plays a key role in determining optimum selling weights.
The following graph illustrates margin over feed cost depicted for two different packer grids (a light-weight grid and a heavy-weight grid) using current market conditions (for the prices of hogs and feed). A truck load CV of 6.5 percent was used for each example.
Some points to consider based on the graph:
- For both grids, it is most advantageous to try to be in the lower end of the packer grid (but not underneath it).
- For those producers that sell exclusively into a light-weight packer grid, it is critical to avoid heavy-weight loads.
- Given the apparent lack of incentive for growing pigs to heavier weights, and field reports of pigs growing very well on the new corn crop, now may be a good time to evaluate your feeding program to see that it matches up with your throughput goals and pig flow.
- Both packer grids illustrated above are representative of grids being used in the industry. Understanding the specific grids you sell pigs into is crucial. Vita Plus can work with you to help you analyze and understand how your specific packer grid impacts your profit margin.
- Finally, if you are finding that you have more down time as a result of selling pigs at a lighter market weight than you were previously, it may be the perfect time to consider some barn maintenance that you may have been putting off.
Very few factors in pork production have as much of an immediate and dramatic impact on your bottom line as actively managing market weights. The Vita Plus swine nutrition team has several tools available to help you design a feeding program and manage market weights to help you reach your goals for your operation.
About the author: Nate Brown is the swine sales manager for Vita Plus and has been involved in the feed industry for more than 20 years. He received his bachelor of science from St. John’s University in 1991. His area of interest is nutrition and growth and its influence on the profits made for the producer. Brown is an executive board member for the Minnesota Pork Producers Association, a board member for the Martin County Pork Producers Association, and a Minnesota Pork Congress committee member. He lives in Minnesota with his wife, Sarah, and his four children: Hank, Ben, Zach, and Gabby.
Markets and economics
Packer concerns and regulation