By Curt Lacy
2012 was a very good year for Southeast beef producers.
Historically high cattle prices combined with favorable weather to produce considerable profits for cattlemen in the first half of the year. However, corn prices sky-rocketed. Calf prices took a major tumble before stabilizing in late August to finish the year on a strong note.
Through mid-November, prices for 500-600 pound calves averaged 19% above 2011's prices and almost 46% above the five-year average. For some perspective, during the first half of 2012 prices averaged about $30 per hundredweight above those of 2011. On a 550 pound calf, this equated to $170 per head increase in revenue with some weeks seeing year over year changes in excess of $200.
While 2013 will likely not see a repeat of 2012 in terms of price increases, cattlemen have several reasons to be optimistic as they look to 2013 and beyond. The primary reasons are declining cattle numbers and hopefully stable to improving demand. The combination of these two should cause cattle prices to remain very favorable for the next several years.
While dry pastures and increased feeding amounts were a major concern in late spring, the major damage was done later in the year as corn prices increased rapidly causing calf prices to drop precipitously.
Generally speaking, a 10-cents per bushel increase in the price of corn will decrease the price of a 500-600 pound calf in Georgia by about $0.75-$1 per hundredweight and vice versa. This phenomenon is due to the fact that output prices and feed prices are givens for cattle feeder. As a result, the only thing the can control is the price that they pay for calves.