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Spring is here, a time when pig farmer's hopes for good hog prices increase as barbecue season and outdoor events approach. This period always raises hopes that increased demand will stimulate prices and keep them high. Yes, Polish prices are currently trending upwards and, at the time of writing, they have reached around 9.50 zł (€2.23) per kg in class E. Does this price allow for profit with the current cost to producers? What level must the price reach in three months to make wean-to-finish production profitable? After all, both domestic and imported piglet prices are very high! Will lower grain prices help to offset these high animal prices? I will try to answer all this in this article.
To begin, it should be noted that, despite the current price increase, a decrease is expected in Poland this year (analysis by Credit Agricole bank). By the end of the year, the price is expected to be between 6.40-6.50 zł (€1.50-1.53) per kg (live weight). So, in the end, we should expect a decline... but starting when? For the time being, processors are fighting over pork, which is simply in short supply... There is even talk of values above 10 zł (€ 2.35) per kg for class E in the near future. However, this will not be the case forever, and the price of a 20-30 kg piglet in March reached an average of 462.75 zł (108.58 €) per head - this is the value we will use in our cost simulation and the potential minimum price needed to at least break even...
Feed component prices have fallen quite a bit recently, which gives hope that, even though piglets are expensive, the desired income level can be achieved... In the simulation, I have assumed that the theoretical farm has purchased in March not only the animals but also all the raw materials for the feed it will use in the diets for the next 3 months:
Starter
| Component | Price per ton (€) | % of the diet | Cost (€) |
|---|---|---|---|
| Barley | 148.61 | 35.00% | 52.01 |
| Wheat | 145.82 | 32.25% | 47.03 |
| Concentrate | 938.80 | 27.00% | 253.47 |
| Premix | 1,173.28 | 0.80% | 9.39 |
| Soybean oil | 985.55 | 1.50% | 14.78 |
| Acidifier | 3,942.21 | 0.40% | 15.77 |
| Anti-mycotoxins | 8,259.87 | 0.05% | 4.13 |
| Probiotic | 4,388.89 | 0.50% | 21.94 |
| Fermented soy | 938.80 | 2.50% | 23.47 |
| Mixing cost | 21.12 | 100.00% | 21.12 |
| Total | 463.13 € | ||
Grower
| Component | Price per ton (€) | % of the diet | Cost (€) |
|---|---|---|---|
| Barley | 148.61 | 41.75% | 62.04 |
| Wheat | 145.82 | 17.00% | 24.79 |
| Premix | 1,525.55 | 2.50% | 38.14 |
| Triticale | 133.69 | 12.00% | 16.04 |
| Soybean oil | 985.84 | 1.00% | 9.86 |
| Acidifier | 1,408.34 | 0.20% | 2.82 |
| Anti-mycotoxins | 5,194.42 | 0.05% | 2.60 |
| Probiotic | 3,286.12 | 0.50% | 16.43 |
| Soybean meal | 581.87 | 11.00% | 64.02 |
| Wheat bran | 183.07 | 7.50% | 13.73 |
| Peas | 190.69 | 6.00% | 11.44 |
| Limestone | 11.27 | 0.50% | 0.056 |
| Mixing cost | 21.12 | 100.00% | 21.13 |
| Total | 283.16 € | ||
Finisher
| Component | Price per ton (€) | % of the diet | Cost (€) |
|---|---|---|---|
| Barley | 148.71 | 29.55% | 43.94 |
| Wheat | 145.92 | 0.00% | 0.00 |
| Pre-mix | 1,526.59 | 2.50% | 38.16 |
| Triticale | 133.78 | 37.00% | 49.49 |
| Soybean oil | 986.45 | 0.70% | 6.90 |
| Acidifier | 1,409.22 | 0.20% | 2.82 |
| Anti-mycotoxins | 5,197.67 | 0.05% | 2.60 |
| Probiotic | 3,287.34 | 0.50% | 16.44 |
| Soybean meal | 582.14 | 7.50% | 43.66 |
| Wheat bran | 183.15 | 12.50% | 22.89 |
| Peas | 190.78 | 9.00% | 17.17 |
| Limestone | 11.27 | 0.50% | 0.056 |
| Mixing costs | 21.13 | 100.00% | 21.13 |
| Total | 265.25 € | ||
As we can see, starter, grower, and finisher diets cost 463.13, 283.16, and 265.25 €/t, respectively. Compared to the last analysis in December 2023, there is a price drop of about 23.48 €/t in all cases. Will it be enough to compensate for the increased piglet prices?
Let us contrast the current feed prices with other costs, assuming that we are finishing animals to a weight of about 100 kg:
Finishing
| Direct costs | € |
|---|---|
| Cost of piglet | 108.65 |
| Feeding phase I | 16.87 |
| Feeding phase II | 19.03 |
| Feeding phase III | 22.18 |
| Feeding phase IV | 19.89 |
| Water | 0.53 |
| Veterinary services | 5.87 |
| Labor costs | 21.41 |
| Total direct costs | 214.40 € |
As we can see, the production cost of a finishing pig with a slaughter weight of about 100 kg is 214.40 €. That is a lot of money. So, to break even (labor is also accounted for in this simulation) the price should reach more than 2.11 €/kg live weight in June. Converted to the SEUROP classification, this value is 2.68-2.69 €. These values are already close to last year's highs and it does not seem realistic to reach them this season... although the pig market in Poland has already shown more than once that it can be very unpredictable. What is the conclusion? If we do not achieve profitability in finishing (remember that the diet I used is subject to change), then in the summer period we can expect lower demand for piglets, which in turn should translate into lower prices for these animals... and therefore a greater tolerance for falling hog prices... but also lower hog production in the second half of the year... and this may again lead to price increases at the buyers, as plants will be looking for raw material. Like any other market, swine is an interconnected system, where disparities cannot be maintained too long. Everything has to balance out and be at the right level, otherwise the market starts to wobble. This wobble either results in rises, when there is a shortage of pigs or falls when there are too animals.
The situation is somewhat better in farrow-to-finish operations... but we'll talk about that some other time...
The above analysis clearly shows that the line between being profitable and not profitable is very sensitive to changes in the prices of both feed components and young piglets. Therefore, I urge prospective piglet buyers to calculate carefully, with a piece of paper, a pencil, and a calculator, the chances of making a profit on the investment in the purchase of piglets for finishing. After all, pig production is not about having pigs, but about being able to make a decent living from them, which is what I want for me and for you.
