Managing hog margins: Why small moves in corn price mean big change in feed cost

WEST LAFAYETTE, Ind. — Corn prices do not have to move much to make a noticeable difference in hog feed costs.

For swine producers planning for the coming year, that could mean a significant change in the cost of finishing hogs, said Michael Langemeier, agricultural economics professor and director of the Center for Commercial Agriculture at Purdue University.

“If you’re a hog producer looking ahead to 2027, there’s one input price you probably don’t want to ignore — corn,” he said.

Corn makes up a large share of the ration, so even relatively small changes in corn prices can have a very large impact on the cost of finishing a hog.

“Right now, there’s a wide range of possible corn prices looking ahead. That’s due to the low stocks-to-use for corn, both in the U.S. and the world,” the ag economist said.

Using historical data from 2007 through 2025, Langemeier examined how changes in corn and soybean meal prices affect swine finishing feed costs — and what a range of potential prices could mean for next year.

“We found that every 10-cent-per-bushel change in corn prices changed swine finishing feed cost by 43 cents. So, a pretty large change for a very small change in corn price,” he said.

“If corn moves 75 cents per bushel, as an example, we’re talking roughly $3.25 per hundredweight change in feed cost. That’s not 10%, but that’s a pretty large change in feed cost.”

Using corn and soybean meal prices available in early September, Langemeier’s projection puts the average swine finishing feed cost index for 2027 at 113.9, compared to 103.8 for 2026. An index of 100 represents the year 2025.

“That’s a 10% increase when you look at 2027 compared to 2026,” he said. “But I think the range around that number is more important than the number itself.”

If corn prices end up toward the lower end of the range, feed costs could be about 5% higher in 2027.

“That’s more doable — you can live with that a little easier than 10%,” Langemeier said.

At the higher end, however, feed costs could be about 15% higher.

“That’s a large change from one year to the next,” Langemeier said.

Soybean meal matters, too: every $10 per ton change in soybean meal prices changes feed costs by about 37 cents per hundredweight.

“So, when you’re thinking about 2027 hog margins, I would just ask: What’s my expected feed cost?” Langemeier said.

“I’d also ask how much could that feed cost change if corn and soybean meal prices move. That’s where the risk really shows up.”