Pork Profit Maximizer – Retail Edition

February 4, 2019

It is important to understand the myriad ways in which hogs are priced and delivered these days. Gone are the days when all you had to do was look at the IA/MN lean base price and have a pretty good idea where hogs were trading at. For the week ending January 25, the average national base price for producer sold barrows and gilts was calculated to be $60.95/cwt. This is the input we used to calculate the gross margin above. And yet, the average net price of negotiated hogs was $53.17/cwt, 87% of the average price for the week. While you may be used to looking at the negotiated price, those barrows and gilts represented just 2.7% of the producer sold hogs and the discount to the overall price was substantial. The negotiated price is used to price a large portion of the hogs sold through the “swine/pork formula” category. But more hogs are also formulated today using the cutout which is why the average net price for the “swine/pork formula” category was $58.74/cwt, 96% of the overall price. The table below illustrates how the volume and price of hogs sold through the four main marketing channels compare to the average net price.