Feed cost: Relief in sight?

by Bryan Salvage
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W. LAFAYETTE, Ind. – Within weeks, US pork producers may start enjoying lower feed costs, predicts Chris Hurt, a Purdue Univ. extension economist. Corn prices may decrease by $2 a bushel by harvest time while soybean meal prices are anticipated to fall by $130 a ton during the next three months.

Unseen factors could change this outlook, however, but if realized – feed-cost reductions could be of record magnitude, according to Hurt. In the second quarter of 2013, estimated total costs for hog producers are expected to fall from $69 per live hundredweight to approximately $56 in the fourth quarter, he added. A $13 drop would be a record breaker.

During the last 12 months, pork producers lost an average of $21 a head, Hurt continued. Profits for the next 12 months, however, are predicated to average $16 a head. As a result, pork producers may expand production by 1 percent to 3 percent over the coming year, Hurt said. However, the amount of increase depends partly on where feed prices end up. During the past six years, feed costs have been the single, largest factor impacting pork producer profitability.
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