Dillon Feuz

In the Cattle Markets

The corn market

by Dillon Feuz, professor, Department of Applied Economics, Utah State University

We have known since early summer that we had a potential for a very large corn crop, perhaps to set a record of more than 13 billion bushels (bu.). Summer growing conditions were near ideal for much of the Corn Belt. As a result, December corn futures declined from around $4.70 per bu. in early June to $3.10 per bu. in the first week of September. However, while much of the corn crop spent most of the growing season in the U.S. Department of Agriculture (USDA) Good to Excellent growing condition, it was also late. The crop was planted late, it emerged late, and it was maturing late. Therefore, there was always an uneasiness to the corn market because everyone was aware that an early frost in the Northern Corn Belt could have the potential to take yield away from this crop in a hurry. That event did occur, and corn prices rallied back to more than $4 by the third week of October. Prices retreated somewhat following that initial rally back to the $3.60 level by Nov. 1. However, the corn market has been trending higher in November, and by Nov. 10 the market was at $3.90. It now appears that December corn will trade much closer to $4 per bu. than the $3 level it flirted with in September.

Once again, this level of price volatility makes it very difficult for cattle feeders and other livestock enterprises dependent upon corn. Cattle feeders seem to be buying feeder cattle at a discount to what future fed-cattle prices are and what current corn prices are. But, who can blame them? They have certainly been burned by increasing corn costs in the recent past and are not willing to suffer those kinds of losses again. I have not done the scientific analysis on this, but it would seem that volatility in corn prices are likely costing feeder cattle producers about $5 per hundredweight (cwt).

The cattle markets

The fed-cattle market was steady to lower this past week. Most trade took place Thursday, Nov. 12, with limited trade on Friday on a reduced volume compared to the past couple of weeks. Prices were $85-$87 on a live-weight basis and were mostly $134 on a dressed basis.

Choice boxed beef prices were a few cents higher this week. The Choice-Select spread increased a few cents and is narrower than the typical level.

Feeder-cattle prices were mixed this past week compared to the previous week. Montana prices were generally 50¢ lower on both weights of feeder cattle. Nebraska prices were $2.50 and $5 higher for 750-pound (lb.) and 550-lb. steers. Oklahoma prices were less than a dollar higher for both weights of feeder cattle compared to last week. Corn prices were 8¢ per bu. lower than last week. Dried distillers' grain prices were $3 per ton lower and wet distillers' prices were less than a $1 lower per ton in Nebraska for the week.

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