Lean Hogs Hedge Model and Crush Margin Calculator

price is determined by the local bid price. These calculations are then incorporated into the othercosts of production, and ultimately determine the projected profit per hundredweight or per headof lean hogs.The model is the beginning of what can potentially become an intricate tool. While thecorn bids on this model come from Crystal Valley Cooperative, where the Roberts Farm doesbusiness, figures for corn prices could be expanded to include different elevators at the click of abutton. It would also be very useful to have a way to automatically update corn contract pricesfor local elevators the same way our model automatically updates futures market prices. Thiswould save time and decrease errors by the user. As far as the assumptions and fixed costs, themodel could also be specific to certain hog sites, diets, and could also be used in comparison tothe corn, soybean meal, and lean hog prices when transportation costs and other site-specificconsiderations are taken into account. Finally, a more thorough analysis of historical marginscould be performed to improve percentile analysis of the hedge profit.As stated earlier, this model uses input information pertaining to the Roberts operation,and certain tables, such as the cost of production tab, are categorized according to their financialstatements and in accordance with Iowa State averages. However, this model can easily beapplied to most hog operations in southern Minnesota and throughout the Midwest. Costs ofproduction as well as local feed costs can easily be adjusted, and will be automaticallyincorporated into the hedging calculation.Another reason why this model is easily convertible to other hog operations is because itis based on a per hundredweight basis. That type of calculation makes it possible to comparedifferent farms with each other. The input is either reliably standardized or based on local feedcosts to be inputted by the producer. The cost per head will often be different based on the scaleof the operation, but making simple changes to the costs in the model will account for thosedifferences. The user can simply input their desired market weight and it will change allassumptions within the model.III. OVERVIEW OF SECTIONSBefore any projections can be made, the fixed costs of production must be taken intoaccount by going to the Cost of Production tab. These costs cover every expense per head fromfarrow-to-finish minus the volatile costs of corn and soybean meal. There is a flat rate for the4 | P age