Producers Face Many Considerations as Feeder Markets Come Under Pressure of Rising Feed CostsWed, 17 Jul 2019 11:05:54 CDT
It is almost certain American corn farmers will not produce near as many bushels of corn this year compared to the past few growing seasons, thanks to widespread late planting caused by persistently wet conditions earlier this year. Lower corn production of course will naturally drive feed costs up for livestock producers. Faced with this likely prospect, Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel says one thing is for sure - as feed costs rise, so too will the pressure on feeder cattle values.
“It’s certainly a factor and no question it’s going to be higher than we thought a few weeks ago,” Peel said. “Feeder cattle markets are reflecting that to some extent. But I think there is more going on in the feeder cattle markets as well.”
According to Peel, over the past eight weeks or so, the futures market has undergone a fairly steep correction - arguably from one extreme to the other where he says the market was at one point probably too high and then brought too low. Now, the market seems to be bouncing back from that overdone correction. Combined with the underlying uncertainty and rising pressure from feed prices, though, Peel says the feeder markets have slumped into a counter-seasonal mood lower this summer rather than their typical upward trend toward a peak that usually occurs around August or so. Peel says if the markets can pull themselves out of this slump over the next few weeks, there is the chance they could still pick back up that normal summer trend, albeit at a lower level. Nonetheless, cow/calf producers will still have to make their marketing decisions soon in regard to their current calf crops. Peel says many producers are currently considering the possibility of retaining ownership of their calves and some even looking at alternative timeframes.
“Whether you’re buying those animals in a commercial stocker sense or looking at retaining ownership of raised calves - I always tell producers - you can figure it out, but it won’t stay figured out,” Peel quipped. “This is a really dynamic period where that’s certainly going to be true.”
Listen to Peel’s full analysis of the current feeder cattle market and how the cost of feed is affecting them, 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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