Brumm Speaks Out: How are your feed costs computed?

Last week I wrote about the 2015 MetaFarms data summary for nursery, grow-finish and wean-finish sites. For feed utilization I cited both feed conversion (pounds of feed per pound of live weight gain) and feed cost per pound of live weight gain.

One of the biggest challenges any recording scheme which includes feed cost per unit of gain faces is how feed ingredients get priced into the record system. For the 2015 MetaFarms data set, the average corn price ($/bu) reported for nursery, grow-finish and wean-finish was $3.79, $3.81 and $3.66. The average soybean meal price ($/ton) for the 3 data sets was $342.14, $355.19 and $357.41. These prices represent the price captured from the feed mill software that is uploaded to MetaFarms.

Since soybean meal is always a purchased ingredient, the value of this ingredient is usually what the toll mill charged for the ingredient or if the diets are home milled, what the delivered cost of the ingredient was (unless the producer used their own truck for transport and didn't add an internal transport cost to the ingredient). The same pricing rational applies to DDGs usage.

However, understanding the true price of corn in swine diets gets messy - fast! If producers grow corn, is the value to swine the cost of production (all profit and loss from grain production accumulates to the swine enterprise), an arbitrary transfer price between the corn growing and swine enterprises, the grain bank price at time of grain banking, the local market price on the day of transfer, etc.?

Where do hedging profits and losses fit into these pricing systems for both corn and soybean meal?

Read more.