What is in this article?:
- Cow-calf producers should continue to prosper for at least the next few years, as beef exports boom and national herd numbers remain low.
- Current good prices for their cattle should remain in that lofty range for two years or even longer.
- Beef production is still an industry requiring tough decision-making. That is unlikely to change, no matter what the price per pound may be.
Beef production is still an industry requiring tough decision-making. That is unlikely to change, no matter what the price per pound may be.
Sizable corn crop
To moderate feed input costs, the U.S. must produce a sizable corn crop this year, and that could be problematic, says Mike Murphy, CattleFax manager of risk management. Some weather analysts project a cool, wet spring in much of the Midwest, which would disrupt normal planting, much like last year.
Murphy expects corn growers to plant a 94-million-acre crop this year, up from just under 92 million acres in 2011. Everything hinges on weather conditions, however.
“If it’s a cold, wet spring, we could see a shift back to soybeans. But the equipment we have now lets farmers get the crop in the ground fast, so there may not be that much shift. The key thing is how Mother Nature treats us. There’s going to be plenty of anxiety in getting the crop in the ground and in how it progresses through the summer. There is going to be a challenge in front of us,” Murphy says.
“We have a historically small corn stocks-to-use level. If we get 94 million acres planted, the stocks-to-use ratio could rise to the 8-percent-to -11-percent range from the current 5-1/2 percent-to-7 percent. But it could take time to build stocks back up.”
Corn exports could increase a bit over the next two years, Murphy says. He points out that, due to production problems and domestic demand, the U.S. exported 44 percent of its corn in 2011 compared to 56 percent over the previous five years. Ukraine and Argentina filled that export gap, he says.
“Even corn is becoming more and more of a global market. That’s not going to change anytime soon,” Murphy says. He expects to see more wheat fed as protein in cattle rations due to the price of corn, which would help to stabilize feed supplies.
Like grain, beef also benefits from a favorable export outlook, continuing the 2011 trend when beef exports increased 22 percent.
“2011 has been phenomenal for beef exports,” says Brett Stewart, CattleFax global analyst. “Exports added $261 per head to the value of every fed steer and heifer. That’s a fantastic success story for our industry and shows how competitive we are in the global marketplace.”