May 3, 2004

 

 

Feed Costs Rise For US Livestock Producers

   

As grain farmers look forward to profitable crops because of high corn and soybean prices, livestock producers worry it could mean a big jump in their expenses.

 

Corn at $3 per bushel and soybean meal prices of about $300 per ton are raising the cost to feed a hog by $4 to $5 for every 100 pounds of animal, said Art Lehman of Strawn, president of the Illinois Pork Producers Association.

 

Live hogs are selling in the $52 per hundredweight range, which lessens the blow a bit. But futures prices indicate that number could drop to the 40s by fall. About $43 per hundredweight is the break-even price for a hog, Lehman said.

 

"If we get lower prices and still have $3 corn, it's going to be a real pinch for a lot of people," he said.

 

The higher grain prices also are raising costs for beef producers, but the cattle market is good, with prices near $80 per 100 pounds, said Curt Rincker, a Shelbyville farmer who is president of the Illinois Beef Association.

 

The higher feed prices mean livestock producers will need to watch their marketing plans closely, perhaps looking to put sales under contract early "to lock in profit when they can," Rincker said.

 

Producers also could reduce their herds.

 

"If we have any problems with the growing season and grain prices continue to stay high, I think you probably will see some adjustments," said Dale Lattz, a farm management specialist at the University of Illinois. "People will look at their operations more closely."

 

Higher prices for feed will affect hogs more than cattle because beef producers have the option of keeping cattle in the pasture longer or using more hay to avoid using grain for feed, Lattz said.

 

Using alternative feeds such as dry distillers' grains or soybean hulls is another way to cut costs by reducing dependence on corn or soybean meal.

 

Dry distillers grain, a high-protein byproduct of ethanol production, also will help hog producers, but it's good for only 10 percent to 20 percent of a hog's diet, said Lehman, who sends about 90,000 hogs to market each year.

 

Soybean hulls are not a viable diet for hogs being raised for pork, he said.

 

Lehman and Rincker also grow grain, so they're reaping the benefit of the higher price. In the long run, they say, higher grain prices tend to be good for all of agriculture.

 

"Historically, when grain prices go up and feed costs rise, there may be some short times when it's tough for livestock," Lehman said. "But we've fared better when grain prices are high."