Fall Calf Market Expected to be Driven by Higher Corn Prices with Limited Potential for UpsideThu, 08 Aug 2019 10:04:30 CDT
According to the Livestock Marketing Information Center’s director, Katelyn McCullock, the crazy weather that has impacted the 2019 corn crop is likely to result in higher corn prices in the coming months, as well as lower feeder cattle prices. McCullock points out the December corn futures contract is near $4.09 currently, which she says takes into account some of the existing yield and acreage considerations. However, she believes that number could actually climb higher as more information on the corn crop becomes available.
“We’re somewhere closer to the $4.50 range and that really takes into account probably some significant more yield drag than the market has on it right now, which includes that potential for an early frost,” she said. “Our acreage is in the million to a million and a half below what the acreage was last year - factored in. If you take both pieces of information - what we translate that to mean is that calf and feeder prices are likely going to be lower this fall because feed costs are going to be higher.”
Based on the LMIC’s calculations, McCullock estimates that as we come into late fall and early spring, calf prices will slip about $10/cwt lower, banking on a 50-cent appreciation in that December futures price. McCullock clarifies that this scenario of course has its caveats and that the overall picture could potentially change as more information on the corn crop is made available. But, she contends that the information provided in future USDA Crop Progress reports might be unreliable for the time being which could leave continue to build general uncertainty up until this fall and leave everything up in the air. In the meantime, she insists that cattle producers pay close attention to the markets as these factors come into play over the next few months.
“I think it’s important to be a little nimble this year and watch that market,” she said. “We’re predicting heavier weight feeders being down about $5/cwt this fall heading into the spring quarter - but we’re also factoring in a slightly smaller calf crop. We think that should still offer some support to the calf market. But I still expect that calf market to be driven by feed costs with limited potential for upside at this point.”
Listen to McCullock’s full analysis of the corn market’s impacts on cattle prices this fall 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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