Last year the cattle industry had to adjust to $3 corn and since the first of the year prices have shot up to $5 per bushel. Randy Blach, executive vice president of Cattle-Fax, told the annual Cattle-Fax Outlook Seminar at the Cattle Industry Convention and National Cattlemans Beef Association Trade Show in Reno, Nev. that in the coming year feeders will feel the squeeze and feeder cattle prices will be limited by the volatility in the grain markets.
"There is even more reason to be concerned about corn prices this year," Blach says. "Prices for other commodities have risen along with corn, increasing competition for what farmers choose to plant."
Although the corn harvest in 2007 was a record 13 billion bushels, Cattle-Fax analysts say margins across the cattle industry will be pressured by the need of another near-record corn crop because of strong export demand and increased ethanol mandates.
Other topics covered at the Cattle-Fax Outlook Seminar included rising input costs of fuel, conversion of pastures to cropland, and the need to fully open international markets to increase demand for U.S. beef and allow producers to utilize foreign markets for products U.S. consumers don't value.
"Profit opportunities exist, but it will take tough management to find them this year," Blach says. "There are a lot of programs out there that hold promise for increased value, but you have to do your homework to make sure you're selling into one that actually pays. We always have to re-evaluate our business, and some of the dynamics this year make it imperative that cattlemen position their business to minimize risk as much as possible and take advantage of the profit opportunities that are out there."