What is in this article?:
- Stage set for Southeast cattle producers to make money in 2014
- U.S. herd size remains low
- The 2014 marketing for the cow-calf sector is about as good as it can be.
- A 10-cent swing in the price of corn will change the price of a 500-pound calf in Georgia by about $1 per hundredweight.
CATTLE MARKETING in 2014 and for next couple of years looks to bring ample chances for Southeast cattle producers to make some profits.
Southeast cattle producers better strike while the iron’s hot. For the most part, the economic outlook rarely gets as rosy as it promises to be for 2014 and beyond, and cattle producers could see some opportunitites for making real money.
That was the nutshell-message Curt Lacy brought to the 2014 Georgia Ag Forecast series held in January. The annual forecast series is sponsored by the University of Georgia College of Agricultural and Environmental Sciences and the Georgia Farm Bureau. It brings farm specialists and professionals together to share their best educated guesses on what farmers can expect in the coming production season.
The 2014 marketing opportunities for the cow-calf sector, for example, “are going to be about as good as they can be. If you’ve been in the cow-calf business for quite some time and you’re up to full production and you can’t make money this year, it’s a problem for you because it’s probably as good as it’s going to get as far as profitability,” said Lacy, a UGA Cooperative Extension livestock economist.
Cattle producers know that overall cattle supplies are down and the market is tight, but higher feed costs tempered profit margins over the last few years. “But now, not only have supplies tightened, but now we’re talking about $4 and $5 corn (in 2014) as opposed to $7 or $8 corn (in previous years). As a result, feeder calf prices are already at historical levels as we start this year. And my expectation is this will be a very, very good year for our cattle producers unless something major happens … some type of global or economic situation not necessarily related to the supply side of things for our beef cattle. And I think next year (2015) will be good to,” he said.
Stocker business should still see some profit but not as profitable as the cow-calf side of things, he said.
Corn prices vs. feeder cattle
Corn prices and feeder cattle prices have a strong negative correlation, he said.
“Basically, when the price of corn goes up, the price for feeder cattle goes down because the feed yard, which is where most of our cattle wind up, can’t control the end price, and they can’t control the price of corn. Both of those are given to them. But they can control how much they pay the cow-calf producer,” Lacy said.
Typically, a 10-cent change in the price of corn per bushel will change the price of a 500-pound calf in Georgia by about $1 per hundredweight. “So, if the price of corn goes up $1 a bushel, you’ll see feeder cattle prices go down $10 per hundredweight, or 10 cents a pound,” he said.
Cattle prices will be higher, he projects, in 2014. For example, producers in Georgia can expect a 500- to 600-pound steer to run $5 to $10 per hundredweight higher in 2014 than 2013.