Milk and livestock prices have improved from their weak levels, bringing hope to the livestock sector, but better profits may not follow, worries Robin Schmahl, whose brokerage firm, AgDairy LLC in Elkhart Lake, Wis., specializes in risk management for dairies. Although USDA forecasts the national average farm-level corn price for 2010/11 at $3.20-$3.80, not much changed fromthe 2009 crop, short-term prices are well above that level, he says.
"The market is concerned that corn and soybean production may not be as large as USDA estimated. Corn futures have surpassed $5 and soybeans are now pushing near $11. Export sales have been good, with China being a continual big buyer of soybeans as well as a buyer of corn. Fund traders now own record long positions," he notes. "It looks like a repeat of 2008, with higher grain prices squeezing profitability."
For Schmahl’s complete commentary, see: http://www.agweb.com/livestock/dairy/blog/AgDairy_Market_Update__236/milk_prices_look_better,_but_grain_prices_soar/
For a quick dairy profit calculation using different feed costs, fill in your numbers at: http://www.dairyprofitanalyzer.com/application/MPICalc/
For spreadsheets from Oklahoma State University to calculate potential profits on various beef feeding programs (stocker, feedlot, etc.), see: http://www.ansi.okstate.edu/software/