Increasing corn prices should result in lower calf prices this summer.
An analysis from the Livestock Marketing Information Center indicates returns on cow-calf operations have been adjusted to reflect higher corn prices. Initial thoughts predicted positive cow-calf returns both this year and in 2020.
“Calf prices were raised across the board to reflect season average corn prices in the mid-$4 per bushel range,” the LMIC says in its analysis. “Steer and heifer calf prices are now expected to fall by about 3% in 2019 relative to last year, equivalent to taking between $4-$7 per hundredweight out of 500-600 pound calf prices in the Southern Plains.
“The dramatic change in corn over this planting season resulted in a forecast of cow-calf returns changing expectations from a gain of $27 per cow to a loss of $14 per cow. This is similar to the returns seen in 2018.”
Similar adjustments were made to anticipated returns in 2020. Cow-calf returns were lowered by nearly $13 per head but are still expected to be somewhat positive next year, according to the LMIC.
Calf prices were dropped over the first half of 2020, indicating corn prices are expected to remain higher than anticipated. The LMIC does expect cull cow prices to rebound next year, and cow-calf returns are still “penciling out to be the best returns in several years by 2020.”
Wet weather continues to cut into the 2019 hay crop. The LMIC says anticipated yields have been lowered accordingly.
“Reports out of the Northern Plains and Midwest with respect to hay are not positive,” they said. “New seedings of alfalfa in those states are about half of all new seedings this year, and some of those acres are likely struggling with soils that are wet, cold or flooded.
“Winter kill was also potentially an issue in these areas, as this winter was not the kindest either. It is unknown how many of those fields face irrecoverable situations, but for now, we assume that should the fields dry out those acres will still be harvested, but may lose a cutting.”
According to the USDA, hay prices jumped nationwide. Alfalfa prices increased by $15 per ton, and prices are expected to remain high early in the season.