Ingredient Update for Swine Diets
To say we are living in unique and unprecedented times currently would be an understatement. One of the positive things I have seen come out of the current social distancing environment is an increased appreciation from the general public to those folks that are involved in the food industry – from raising livestock and crops to processing and transportation, and all the other steps that are involved to feed our nation. Thank you for all you do in this endeavor!
One of the areas COVID-19 has impacted is ingredient prices and supply, especially for many amino acids and vitamins that are manufactured primarily in China. With reports indicating that COVID-19 in China may be plateauing or even declining now, it is certainly our hope that segment of the ingredient market can return back to pre-COVID-19 levels in the near future.
Interestingly enough, due to unrelated circumstances, we have seen a significant decrease in the price of oil, which has exerted negative economic pressure on the ethanol industry. Due to this situation, we have seen and expect to continue to see some ethanol plants decrease production and/or suspend activities. Many of our producers utilize dried distillers grains with solubles (DDGs) from these plants as a key ingredient in their livestock diets. A decrease in DDG supply, in conjunction with increased prices, are expected here in the near term. In order to evaluate economic inclusion of DDG in swine diets during these uncertain times, I ran a number of price scenarios against corn and soybean meal (SBM) in order to assist producers in determining when DDGs no longer provide cost savings in diets:
|Price||Corn $3.00/bu||Corn $3.25/bu||Corn $3.50/bu||Corn $3.75/bu||Corn $4.00/bu|
The preceding table was generated using current pricing for amino acids, fat, and mineral supplements. DDGs are a good source of energy, protein, and phosphorus in swine diets. Break-even prices for DDGs given different corn and SBM prices are presented. For instance, if current corn price is $3.50/bu and SBM is $300/ton, one would reduce diet cost, on average, when including reasonable amounts of DDGs in diets as long as DDGs price was less than $179. If corn price increases $0.25/bu, the value of DDGs increases another $6/ton, whereas if SBM price were to drop by $25/ton, DDGs value would similarly drop by about $9/ton.
These values are estimates. It is encouraged that you speak with your Form-A-Feed representative to determine specific strategies for your situation. For instance, if DDGs supply dries up, diets will need to be adjusted to account for reduced or no DDGs inclusion, and other alternative ingredients may need to be considered if they price in. Feed makes up 2/3 to 3/4 of the cost of raising pigs. Making certain diets consistently meet the nutritional needs of the pig in an economical manner is key to ensuring the long-term success of your operation! We are here to help!