The pork industry experienced a positive turn in May as producers posted a profit, marking a significant improvement from the losses incurred a year ago. Iowa State University’s estimated returns for a wean-to-finish hog operation revealed a profit of $21.95 per head in May, contrasting sharply with the $40.04 per head loss recorded in the same month last year.
Key Factors Driving Profitability:
- Reduced Total Costs: Total costs per head in May were $168.60, an 18% decline from the previous year. This reduction played a crucial role in the improved profitability.
- Increased Selling Price: The selling price per hundredweight (cwt.) was $91.87 in May, a 17% increase from last year. This higher selling price was a pivotal factor in the better returns.
- Break-Even Price: The combination of lower total costs and higher selling prices resulted in a break-even selling price of $83.26 per cwt. in May.
Feed Cost Reductions: The Livestock Marketing Information Center (LMIC) highlighted that lower total feed costs in May significantly contributed to the improved returns. Total feed costs per head were $84.24, down 26% from last year and the lowest since January 2021, when it was $78.47 per head. The breakdown of feed cost reductions includes:
- Corn Feed Costs: Declined by 33% to $36.96 per head in May.
- Soybean Meal Costs: Decreased by 18% to $16.15 per head.
- Dried Distiller Grain Costs: Fell by 29% to $10.96 per head.
Weaned Pig Prices: Lower prices for weaned pigs also played a role in boosting profitability in May. The price per weaned pig was $31.47, a 27% decrease from $43.37 per head a year ago.
According to the LMIC, Iowa State University’s estimated returns assume that a hog marketed in May was purchased as a weaned pig in November of the prior year. Based on this assumption, for June, a weaned pig would have been purchased in December 2023, with prices averaging around $37 per head during that month.
Current Market Trends: The LMIC reported that weekly slaughter hog prices (base, national weighted average carcass) have averaged around $90 per hundredweight in June. This price remains above the break-even selling price of $83.26 per cwt. in May, indicating a continued trend of profitability.
Conclusion: The combination of reduced feed costs and increased selling prices has led to a profitable month for pork producers. These factors, along with lower prices for weaned pigs, have contributed to the industry’s positive financial performance. This trend highlights the importance of cost management and market price strategies in maintaining profitability in the pork industry.
By focusing on these key areas, pork producers can continue to navigate the market effectively and achieve sustainable profits.
