Lean Hogs Hedge Model and Crush Margin Calculator

Exhibit 2. Weight and Premium Assumptions in Cost of Production tabWEIGHT AssumptionsLive Weight 270 PremiumConverted Carcass 199.8 3.50%With the other costs established, it is necessary to move to the Feed Composition tab tobreak down and make assumptions on feed consumption per head, from wean-to-finish. Exhibit3 shows the breakdown in corn and soybean meal feeding based on the stage of growth. Thedefault model (based on diets composed by Agri-Nutrition Services) has three phases at thenursery stage and six phases at the grower stage with corn consumption increasing in each stageand the soybean meal-to-corn ratio increasing during the nursery stage and then graduallydecreasing in the growth stage.Exhibit 3. Feed CompositionGrowth Stage Gestation Lactation Nursery 1 Nursery 2 Nursery 3 GF 1 GF 2 GF3 GF4 GF5 GF6Corn lbs/ton 1605 1291 924 962 1123 1358 1488 1634 1745 1814 1846Soy Meal lbs/ton 302 573 99 448 734 511 383 280 212 146 119Corn Bushels per pig 10.7416Soy Meal Tons Per Pig 0.044765Recalculations can be done whenever there is a change in ration at any given stage. Theformulations end with the amount of total corn and soybean meal per head is converted intobushels and tons, respectively, in order for easy comparisons to futures and cash prices of thoseproducts. For operations with a different number of growth phases or otherwise configureddifferently, a slight rearrangement of the table may be necessary. However, this task should notbe difficult for most people with experience using Microsoft Excel. New columns can be insertedor existing columns can be renamed. We opted to make this step less automatic in order topreserve ultimate customization. Feed rations are extremely variable, and users should beallowed to either accept the highly efficient assumptions that are default to the model, or makeup any variety of feed ratio scenarios. Further automation in this step would almost certainlyinhibit the functionality of this model.6 | P age