Between realizing crop shortfalls in South America, a weaker dollar and weather uncertainties, prices for the month of April are up 35 cents for corn to near $4 for corn and $1.10 higher in soybeans back above $10. But the benefit for grain farmers is making it more expensive for cattle feeders.
“This is the month of April … so some interesting things are happening, and they’re all good for now. … We’ve had a sustainable recovery,” said Jerry Gulke, president of the Gulke Group in Chicago, speaking with Farm Journal Radio’s Pam Fretwell.
But the higher corn prices go, the more pinch cattle feeders cattle will feel, according to Gulke.
To be profitable, the combined cost of feeder cattle plus the price of corn will have to be less than the live cattle will bring six months out. Generally when feed grain prices are rising, prices for feeder cattle contract. Often feeder cattle can be a confirming indicator of the direction of corn prices. For the month of April, August feeder cattle were down nearly $15/hundredweight, meaning the cow-calf guy is getting squeezed as well, meaning risk management is important to not only grain farmers, but to livestock producers as well.
Listen to Jerry Gulke's full comments here:
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