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Livestock cause worry

Agriculture.com Staff 05/29/2009 @ 8:06am

The health of the livestock industry is a serious concern to corn and soybean farmers, although it does not get everyone's day-to-day attention. Feed use is a sneaky demand category, unlike exports, crush, ethanol demand-all of which are trumpeted through regular weekly or monthly reports.

Calculated on a quarterly basis, feed use (for corn and wheat) is not thought about very often. However, many do look at livestock futures prices and gauge the health of the meat market. Nowadays, the picture is not pretty.

Hogs have been bleeding red ink for months and the H1N1 flu (and the associated export bans) made it worse. The number of cattle on feed has been less than year ago for 13 months. This week's Poultry Slaughter report shows total pounds of poultry produced down 7 percent. This has been the theme for chickens since last summer's corn/soy price explosion.

It will be a month until the market is forced to confront feed use numbers. Calculated from the quarterly grain stocks report, the next report will be released June 30th.

Of greater concern is the long lasting nature of this situation. Livestock liquidation may only happen when producers run out of money (there are barriers to getting in and out of the business in a hurry). If unprofitability continues, it may be the 2009-2010 demand base that is affected.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The health of the livestock industry is a serious concern to corn and soybean farmers, although it does not get everyone's day-to-day attention. Feed use is a sneaky demand category, unlike exports, crush, ethanol demand-all of which are trumpeted through regular weekly or monthly reports.

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