Beef Markets Surprise with Unseasonable Fundamental Strength Supported by Cheaper Corn StocksTue, 18 Sep 2018 11:00:26 CDT
Cheaper corn in the marketplace have apparently given some unexpected support to fall calf prices, so says Jim Robb, director of the Livestock Marketing Information Center. With a record corn crop expected this year, based on numbers out from the latest USDA Crop Progress report, the economics of the cattle feeding business look promising in the months ahead. According to Robb, historically, a 10 cent move in the corn market either up or down, results in a correlated reverse of calf prices in the Southern Plains by roughly a dollar per cwt.
“Clearly, corn is a major cost of production for the feedlots and that feeds back into calf and yearling prices rather quickly,” Robb said. “Now, we already had our breakevens for placing cattle last month at $128/cwt. So, we’ve already taken these cattle up, but they continue to ratchet up on the corn crop- probably more than anticipated.”
According to Robb, things are looking up in the wholesale side of beef as well. Now is typically the time of year during which we see boxed beef marking lower nearly every week. However, Robb says market fundamentals tell a much different story, currently.
“I think the major story is that the market is that on the negotiated side, the tonnage was very robust last week,” he said. “In fact, the largest tonnage for any week in that negotiated trade since mid-July. So, we’ve moved a lot of meat in the marketplace. That’s a pretty positive sign, especially at this time of year, and reflects underlying consumer demand for products.”
Listen to Robb’s complete analysis of the surprisingly positive trends that have developed in the beef markets as of late, with Radio Oklahoma Ag Network Farm Director Ron Hays, on today’s Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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