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Hope for livestock

Agriculture.com Staff 04/17/2009 @ 1:21pm

Livestock prices have wallowed in a sideways-to-lower price trend for much of the past nine months, facing major obstacles along the way. First were extremely high feed costs. While hog and cattle prices moved in conjunction upward, they did not move up fast enough or stay high long enough to allow for much relief. Then, the economy broke, and consequently, livestock prices reflected demand concerns by sliding 20% or more.

Cattle prices slid from trading well over $100 into the low $80s, and hogs trading near $100 also slid to the $50s. However, the corrective forces that typically dictate price movement have now come into play. With low prices and high input costs, both cattle and hog herds have contracted. A collapse in milk prices has also created a reduction in cow numbers. Bottom line, these three sectors have combined for contraction. In the short term, this adds pressure to prices. Long term, however, the stage is set for a major comeback in cattle, hogs and milk.

Look for the next three to six months for livestock prices to move to the upside. Deferred futures are already reflecting some of this sentiment. Live cattle futures are trading in the $91 to $92 range for early 2010, and deferred hog futures for summer are trading in the mid $70 range. Hogs may trade in the mid $70s to low $80s by mid-summer. Milk prices will recover to the $15 to $17 range by fall.

If you have questions or comments, contact Bryan Doherty at Top Farmer, 1-800-TOP-FARM ext. 129.

Livestock prices have wallowed in a sideways-to-lower price trend for much of the past nine months, facing major obstacles along the way. First were extremely high feed costs. While hog and cattle prices moved in conjunction upward, they did not move up fast enough or stay high long enough to allow for much relief. Then, the economy broke, and consequently, livestock prices reflected demand concerns by sliding 20% or more.

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