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Let more good times roll In the beef business

Gene Johnston 02/05/2012 @ 11:00pm On the scene at the 2012 Cattle Convention, Nashville

What more can be said about this cattle market? It’s in the stratosphere: Market-ready choice steers over $1,600 a head; good lightweight feeder calves $1,000; even cull cows near $1 a pound!

Those phenomenal prices aren’t going away anytime soon. That is the message from the experts at CattleFax, the market research firm that gave their traditional outlook presentation at the Cattle Industry Convention this week. These good prices – $1.25 a pound liveweight for market steers, and $1.80 for feeder calves – will be with us for maybe two more years. Here are the highlights from CattleFax.

Weather outlook

The patterns are shifting, says Art Douglas, CattleFax’ weather consultant. “We’re going from La Nina last year to El Nino (warmer Pacific temps) this year,” he says. That means the winter will continue warm, with more recurring precipitation events. Even Texas, parched last year, is going to get it, except maybe in its panhandle region.

The summer weather pattern in the Midwest is shaping up to be like 2006 and 2009, Douglas says, and that means cool and wet. That should give a decent start to the corn-growing season, with the possibility of some delays from the coolness. 

Corn outlook

Mike Murphy of CattleFax staff says corn futures prices in the first half of 2012 will find upper resistance at $6.50 to $6.75 a bushel, and support about $1 under that. “If the spring is wet and cool, as Art says, we could put some anxiety in the market that will push it through that upper resistance,” Murphy says.

Ethanol production last year was up 6%, and burned through 5 billion bushels of corn. Exports of ethanol, up 200% last year, are now a driving force in that market. Ethanol demand this year may increase a little, to 5.1 billion bushels.

Murphy expects corn acreage this year to be 94 million acres, up 2 million from last year. Some of that will come at the expense of soybeans, which will fall to 74.5 million acres. The corn market continues to favor it over beans. “If the spring is cool and wet, some acres could end up getting switched to beans.”

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