Agricultural News
Corn, Beef Prices to Go Higher, Industry Analyst Says
Wed, 26 Sep 2012 11:56:09 CDT
Don't expect corn or beef prices to go much lower this year says Dan Basse of AgResource Company. He expects actual corn yields to be about 113 bushels per acre, which is on the low end of current industry expectations.
"That means we may lose another billion bushels of corn for the U.S. cattlemen. That billion bushels of loss would translate into corn price highs in the market maybe reaching up to 9 ½ to 10 ½ dollars. And that's not good news for the cattlemen since elevated feed costs will push our margins even deeper into the red."
Basse says corn ending stocks will be at unprecedented lows of 650 to 700 million bushels.
"The one thing I would tell every U.S. cattleman is that you not only have to make sure that you have priced the grain, you have to make sure you buy it from a reputable seller. And by that I'm saying that you have to make sure that seller is going to deliver on his promise."
A couple of rays of hope are that reports of low test weights and fears of aflatoxin could mean discounts in corn prices. Likewise, Basse says, demand for beef will remain high, setting up a better profit picture.
"We are also finding from our overseas customers that they are understanding that maybe importing beef is less costly or more effective than importing the grain themselves. And so that could be good for U.S. beef and meat exports at least for the next year."
Basse also says that U.S. cow numbers will continue to decline, making feeder cattle supplies next year extremely tight.
"So, when we come on the other side of this high grain price cycle, we will find the beef industry really in a very tight positions in numbers that should lead to a rather significant bull market and new all-time price highs for cattle we believe in the second or third quarter of next year."
In the meantime, Basse says continuing to focus on adding quality and value is always a good strategy.
"I think it is always important that we look at some kind of branded marketing effort. That's when the farmer and, of course, everyone up and down the chain gets the most value out of that meat, if you will. So I'm real big on branding going forward, if you will. It helps everyone and it even helps the consumer because he knows he's getting a reliably good, high-quality product."
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