If all goes according to predictions and the weather cooperates, corn prices for cattle feeders, hog producers and poultry integrators will rock along in a narrow range until harvest. At that time, prices will be more volatile, but still should average near current levels.
Last week’s Omaha corn price of $3.71 a bushel was down only slightly from the previous week’s $3.73, with the price this year so far ranging from $3.57 the last week of January to $3.88 the third week of March. The latest USDA World Agricultural Supply and Demand Estimates report put average farm gate prices for corn this year at $3.55 to $3.85 a bushel.
A graph from the Livestock Marketing Information Center illustrates that corn prices this year are following the trend of the 2009-13 average more closely than last year’s weather-plagued market.
It also shows that if corn prices remain locked in the current range, they will run above last year in late July and August as the new harvest approaches.
But there’s an interesting event that appears to happen very often around the last week of September or the first week of August. At that time, corn prices often hit their annual lows. It appears to be associated with a collective sigh of relief as combines hit the fields en masse.
At that time, new-crop bushels have satisfied the needs of exporters and processors who have drawn down their stocks just prior to harvest, and transportation systems are overwhelmed.
Are prices low enough to book a full year’s worth of corn needs? Probably not, since storage costs would eat into the profitability of such a move. An October bounce can be associated with this type of bargain buying, but it still could be something to look for to fill several months’ worth of feed needs.
Corn prices for cattle feeders in the Southern Plains tend to be higher, but the trends are the same.
Wheat sometimes substitutes for part of the corn in cattle rations when corn prices are high and wheat prices are low enough. However, current price ratios rule this out for now, and USDA price projections make it seem an unlikely event this year.
CASH CATTLE MARKET TRADES LOWER
Private sources reported cash cattle markets this week traded lower to a range of $157.50 to mostly $158 and up to $160.50 per cwt on a live basis and at $252 to mostly $253 up to $254 on a dressed basis. These prices were $3 to $6 below the full range of last week’s trades at mostly $160 to $161 live and $256 to $260 dressed.
For the week to date, the USDA reported average five-area prices at $157.87 to $157.90 on a live basis and $250.45 to $252.05 on a dressed basis.
The USDA’s beef cutout value Thursday was narrowly mixed with the choice cutout at $260.01 per cwt, down $0.05 from Wednesday and select at $251.04, up $1.52. Volume was active with 107 loads of fabricated product being sold into the spot market.
The USDA said choice ribs, rounds and loins were steady to firm, while select prices were firm to higher. All chucks were weaker, as were trimmings on lower demand and offerings.
Week-to-date cattle slaughter was pegged at 435,000 head, up from 429,000 in the same period last week but down from 453,000 in the year-ago period.
The CME Feeder Cattle Index for the seven days ended Wednesday was $215.57 per cwt, down $0.96 on the day and $1.33 above the Apr settlement.