Record-high calf prices don't necessarily mean record-high profits in the beef business.
Scott Brown, University of Missouri livestock economist, said rising feed costs will cut into cattle
"Cattle producers should hope for a big corn acreage this spring, with rain in June and July. Also, hope for continued recovery in the general economy," Brown told Dallas County cattle producers. "As more people get jobs, that creates more demand for beef."
To show the difficulty for an economist to predict prices, Brown reminded listeners of 2012. "Remember, as late as May last year, USDA was predicting corn prices at $4.60 per bushel. Recently corn was at $7.40 per bushel."
Beef demand has continued surprisingly strong, although U.S. consumers have cut back on eating beef. Export demand remains strong.
A drought-reduced corn yield and high corn prices in 2012 make it difficult for cattle feeders to make money.
Hope for a good corn crop
In 2013, just hope for that big corn crop, Brown said. That could mean corn prices drop toward $4 a bushel. And not rise to around $8 per bushel.
Cow numbers continue to decline and that means fewer calves going to market. A short calf supply and continued demand means a strong beef outlook.
"The best I can do is to say corn prices will be somewhere between $4 and $10," Brown told herd owners. "I'm being a good economist and saying 'It depends.'" Weather will be the big variable.
"There's not a beef supply problem," Brown said. Beef demand has continued surprisingly strong, although U.S. consumers have cut back on eating beef. Export demand remains strong.
Other variability factors are continued economic growth and a climb in jobs. While recovery and job growth aren't vigorous, they are growing.