Kevin Good, CattleFax's senior market analyst and manager of corporate accounts, says cattle feeders need to get used to higher price levels for corn because that's the biggest risk they've got from a profitability standpoint. Speaking at the Texas Cattle Feeders Association's Annual convention in Oklahoma City, Good warned there will not be a return to prices of $3 or $3.50 per bushel anytime soon.
Some forecasters see corn headed to above $6 in the near future and a range of $4 to $5 is likely. Therefore, according to Good, if you're going to be involved in hedging programs, you need to hedge not only cattle but also need to hedge input costs.
On the positive side for beef prices, the economist noted that net beef supply at 59.3 pounds per capita is tighter than it has been in approximately 15 years. The tighter supply reflects the fact that domestic production has increased at the same time currency exchange rates have driven imports lower. Therefore, Good said market conditions do not appear favorable for a decline in feeder cattle prices.