Prospect of Higher Feed Costs Generating Both Challenges and Opportunities for Cattle ProducersTue, 18 Jun 2019 11:01:55 CDT
According to the latest reports, farmers are likely to forgo planting millions of acres in corn and soybeans. Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel says that will and is currently having impacts throughout the entire beef supply chain from feedlots down to stockers and cow/calf producers. As this situation unfolds amid the backdrop of larger protein supplies and softening demand both domestically and internationally, Peel says it is possible that there is potential for challenges as well as opportunities for the various segments of the beef industry.
“The cattle market situation has changed significantly in the last month or so and it’s largely been driven by what’s happening on the crop side,” Peel said. We’ve got the lowest corn and soybean planting progress on record and at this point it is very clear we’re going to plant less acres, have fewer yields and overall a smaller crop - we don’t know how small yet, but inevitably it means we’re going to see some higher feed prices.”
Already, Peel says this is beginning to weigh on feeder markets. At present, he assumes many feedlots are probably looking at locking in their feed costs with the risk of prices running up even higher than they already have. However, while feeders might be reeling from this situation, stocker and cow/calf producers have a potential opportunity to drive up their profits. According to Peel, higher feed prices often raises the value of gain at the stocker level. For cow/calf producers, it might also translate into a potential opportunity to retain ownership of calves beyond weaning this fall.
“It’s at least something you want to keep in mind,” he said, “and pencil out as the time gets closer.”
Listen to Peel’s complete analysis of the developing cattle market situation as he identifies some of the unfolding challenges and opportunities that might arise in the coming months in response to struggles within the grain complex, 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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