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• Factors to watch next year include the current weak U.S. economy, high levels of unemployment, lack of consumer confidence, political gridlock and chaos at all levels of government, and other issues.
Volatile market movements
“The cattle markets will likely experience some volatile movements with abrupt changes in any of these factors and/or combinations of factors.”
The 2012 growing season of the major corn growing regions started with an earlier planting schedule and more acres planted, says Prevatt. Industry expectations were for a 13-plus billion-bushel corn crop.
“However, dry weather severely impacted growing conditions and caused yield levels to plummet in most major grain growing areas.
“The majority of the crop experienced below-average growing conditions most of the season. Fortunately, harvest weather in most areas provided for a timely harvest.”
Corn and soybean futures prices for 2012 have increased corresponding to the forecasted smaller crops that were projected this season, says Prevatt.
“Corn and soybean prices are expected to move higher in 2013 due to tight supplies worldwide. Therefore, livestock farmers should seriously consider taking steps to manage their feed purchases during the 2012 crop harvest. If these high grain prices continue, animal agriculture will no doubt get smaller.”
The tight stocks-to-use ratios of most U.S. grain crops will keep market analysts monitoring the sizes of crops in Europe, Asia and South America, he says.
“Commodity prices are high and should encourage additional production. Favorable weather and growing conditions will be extremely important to reduce the pressure on grain stocks-to-use ratios.”
Another factor that can affect feed prices and feeder calf and feeder cattle prices is the level of export demand for corn and soybeans, he notes.
“Any major changes in world export demand for these commodities could significantly move market prices. Economic growth in several Asian countries has begun to slow. Additionally, the strength of the U.S. dollar is certain to influence the world export demand (a weak U.S. dollar.”
Unfortunately, says Prevatt, pasture and range conditions have not been better over many of the cow-calf states this year.
“The pasture and range conditions as of Sept. 12 that was rated as poor or very poor was 58 percent of the U.S. acreage in pasture and rangeland. These poor pasture and forage conditions, coupled with higher input costs and higher cull cow prices, have resulted in a large number of cull cows moving to slaughter this year.
“The current weather forecast suggests an El Niño condition which usually means colder winter temperatures and higher rainfall in the Southeast.”
Total 2012 U.S. hay production is expected to be smaller than a year ago at about 120 million tons. That is down 10.8 million tons or 8.2 percent from last year. Average yield is expected to decrease significantly and acreage harvested is expected to increase marginally for hay production.
“Therefore, alternative winter forages and feedstuffs will be in much demand this winter as cattlemen seek to feed their cow herds and stocker cattle.”