It’s no surprise to anyone, but feed costs are expected to continue to rise. Add to that rising cattle prices, and if you feed cattle, you’re lucky just to hit break-even. But how long will all this last? It could go on for a good while.
Derrell Peel, agricultural economist at Oklahoma State University, had this to say in January: "There are some very solid reasons why we are seeing record cattle prices and still have expectations for even higher prices. Limited cattle numbers, high grain prices that temper carcass weights and the need to reduce heifer and cow slaughter all suggest that supplies will tighten significantly in 2011 compared to recent years."
Peel added that the current situation has been a decade in the making. While cattle prices may correct themselves at some point, he said, the key element is demand and how much higher cattle prices can be supported.
"There are numerous factors at work, most of which are long-term in nature and will persist for the foreseeable future," he said. "Although the phrase ‘perfect storm’ is overused, it may apply to the 2011 cattle market situation."
Tools to help you succeed. High cattle prices are good, unless you’re buying them to feed. With such challenging market factors, we’re working to provide you with additional tools and information on www.beeftoday.com to give you a better idea of what’s happening in the current market.
Each Friday, we post a cattle market wrap-up from the marketing experts at Pro Farmer. The analysis is designed to give you a look at what the market did for that week and what it means for the bigger picture of beef production.
We also just added a Weekly Feeder Cattle Risk Management Analysis that is posted on Tuesday afternoons. The analysis shows calculated projected break-evens on feeder cattle bought the previous week and is meant to illustrate pricing differentials between weight classes and sexes of cattle.
In addition, I’d like to hear from you on what you are doing to combat rising feed costs. Are you
not buying cattle or looking for alternative feeds? Are you watching the markets and taking advantage of "deals" on grain when those are available?
Let me know what you’re doing to offset or bypass rising corn prices and we’ll be sure to share those ideas that would be helpful to other farmers and ranchers.
You can drop me an e-mail at email@example.com. You can also share your ideas with others by posting them on our Facebook page, www.facebook.com/BeefToday.
- Mid-February 2011