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Good news on livestock feed prices

By Jonathan Knutson

Mike Landuyt’s cattle feedlot in Walnut Grove, Minn., sat empty for a month and a half this summer. “Corn was so high and feeder cattle were so tight,” he says. But corn prices have tumbled, and Landuyt is feeding cattle again. “There’s just a lot more optimism now,” he says.

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Lower corn prices have made area livestock producers, especially ones with feeder animals, more optimistic this fall. New-crop corn prices soared to more than $8 per bushel a year ago because of devastating drought in the Corn Belt. This year, in contrast, U.S. corn production is estimated at a record 13.8 billion bushels. New-crop corn prices at area grain elevators surveyed weekly by Agweek have dropped to $4 to $4.50 per bushel. Many livestock producers who feed corn say it’s premature to get too excited. Most of the U.S. corn crop isn’t harvested yet, and there’s concern that widespread dry conditions in the Corn Belt could cause the harvest to be smaller than expected.

“Yes, corn prices have dropped significantly. It’s been somewhat beneficial,” says Linda Hanson, who milks about 50 dairy cows with her family near Goodrich, Minn. “But we have to get through the whole year to see where things go,” she says. She notes that milk prices have dropped recently, as well. Kevin Tyndall, a Cando, N.D., pork producer, says that while he naturally welcomes lower corn prices, he’s waiting to see if they last.

Helps feeder livestock

Nonetheless, the promising outlook for the corn crop has pushed up feeder livestock prices, says Tim Petry, North Dakota State University Extension Service livestock marketing economist.

“We’ve seen a very positive influence from lower corn prices, especially on feeder cattle prices,” he says. “It’s all come from lower corn prices, and the expectation of a record corn crop this fall.”

Todd Wilkinson, who operates a cattle feedlot near De Smet, says “it looks a lot rosier out there” now that corn prices have fallen.

While no one knows what the future holds, “The way it looks now, from the cow-calf sector on up through the feeding sector, there are going to be some opportunities to enjoy some profitability for the next couple of years,” he says.

Montana doesn’t grow much corn and the state’s feeder livestock industry isn’t particularly prominent, notes Mark Boone, an Ingomar, Mont., cow-calf operator and president of the Montana Cattlemen’s Association. Still, lower corn prices have strengthened the financial outlook for cattle in general, he says. Feeder pig prices also have improved from “very depressed” levels a year ago, Petry says. Feeder lamb prices, which traditionally have a weaker connection to corn prices, have improved, as well, although not as much as the price of feeder cattle and pigs, he says. Some in the cattle industry have worried that high retail beef prices could cause some consumers to cut back on beef purchases.

Lower corn prices, however, won’t cause retail beef prices to tumble, Petry says. Beef supplies remain tight, so the market is rationing those supplies through high prices, he says.

“I just had a conversation with strictly a crop farmer. He was saying that crop prices have come down so far. I reminded him that there’s another side,” Landuyt says.

Wilkinson says, “I don’t wish $3 corn on anybody. I just would like stability so the farmer can make a profit on his operation and the livestock sector could enjoy some profitability for a while.”

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