What is 'Corn/Hog Ratio'

The corn/hog ratio is a calculation in which the comparison of the price of a hog is divided by the price of the corn needed to sustain him. It is used to determine the profitability of raising pigs versus growing and selling corn.

BREAKING DOWN 'Corn/Hog Ratio'

The corn/hog ratio is used to determine the profitability of raising livestock, pigs in particular. The calculation for corn/hog ratio is the price of one hundred pounds of live hog (cwt) divided by the price of a bushel of corn. The ratio is used to help farmers determine the value of a crop of corn compared to the value of a hog, that they would have to feed with the same crop of corn.

For example, if the price of a hog is $50/cwt and the price of a bushel of corn is $4, the corn/hog ratio would be $50/$4, or 12.5.

Corn is used in this feed ratio because it is a major feed type used in raising livestock, estimated to make up between 65 and 70 percent of pig feed. Many farmers who grow corn could either sell the corn itself as a commodity, or could feed it to their hogs and then sell the hogs. 

If corn is determined to be more valuable than the hog, then the farmer would sell the corn and reduce the livestock inventory. If hogs are more valuable than the corn, then the farmer would feed the corn to the hog, thus selling less corn on the market. The profitability ratio is determined to be profitable at above 1:12. Anything below that is considered to be unprofitable.

Modern applications of the 'Corn/Hog Ratio'

These days many farmers don’t actually grow their own corn to feed their livestock. With modern technology, and the wide availability of shipping and delivery, some farmers now opt to have their feed delivered to their farms. The corn/hog ratio is still a reliable way to determine whether or not pork farming will be profitable for the year.

In 2014, an epidemic swept through piglet populations, causing massive loss of life and inventory. These numbers have altered a lot of pork predictions due to the fear of subsequent pork shortages. Only time will tell if these numbers will right themselves in the coming years as supply and demand stabilize, but the ratio still remains the benchmark for farmers trying to decide whether to increase their supplies or to cull their inventory.

  1. Basis Quote

    Basis quote refers to a quote given on a futures contract expressed ...
  2. Cash Commodity

    A cash commodity is a physical good which is delivered in exchange ...
  3. Ratio Analysis

    A ratio analysis is a quantitative analysis of information contained ...
  4. Accounting Ratio

    Accounting ratios, also known as financial ratios, are used to ...
  5. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ...
  6. Pork Bellies

    Pork bellies are the cut of pork that comes from the belly of ...
Related Articles
  1. Insights

    6 Countries That Produce the Most Corn

    The world's six major producers of its most popular grain, corn, include the United States and China. Learn if these producers are net importers or exporters.
  2. Investing

    Is This ETF the Best Way to Trade Corn?

    With corn down some 60% since its 2012 high, a recent bounce higher was welcome. But several key resistance levels are suggesting a continued downtrend.
  3. Investing

    Corning’s Upcoming Earnings: What to Expect

    After consecutive earnings beats, the high-tech glass manufacturer may surpass expectations.
  4. Investing

    Corning Inc. Stock Breaches 52-Week High (GLW)

    The wearable tech company's latest Gorilla Glass SR+ technology is expected to drive future revenues, lifting Corning's stock past consensus price target.
  5. Investing

    Behind Corning Inc.’s Shares Rise 35% in 2016

    The maker of Gorilla Glass saw growth outside the consumer electronics space this year.
  6. Investing

    Corn Traders Are Bracing Themselves For More Selling

    Recently, the DBA fund started trading near a short-term level of support. This move sparked talks of a commodity reversal. Corn prices are suggesting this prediction is too early.
  7. Investing

    Corning Releases New Glass-Enabled Concept Car

    The high-tech Gorilla Glass maker foresees 'exciting new opportunities' in the evolving auto space.
  8. Investing

    Corning and Belden Collaborate on Broadband

    The high-tech glass specialist will work with PPC Broadband to enhance networks.
  9. Investing

    Debunking Biofuels: Do They Really Raise Food Prices?

    Learn about the two sides of the argument on the effect biofuels have on food prices and about other factors that affect food prices.
  1. How can a company quickly increase its liquidity ratio?

    Discover what high and low values in the liquidity ratio mean and what steps companies can take to improve liquidity ratios ... Read Answer >>
  2. Why do shareholders need financial statements?

    Discover the importance of a company's financial statements for stock shareholders in evaluating their equity investment ... Read Answer >>
Hot Definitions
  1. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  2. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  3. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  4. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  5. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center