Livestock producers are likely to see shrinking feed costs ahead with one market analyst forecasting lower corn prices as ethanol demand will be “flat-lining” into 2022.
Dan Basse, AgResource Company, told the good news to cattle producers at the eighth annual Feeding Quality Forum at the end of August. After grain producers saw higher profits last year, Basse says it’s time for livestock producers to have their turn.
“You have been fighting ethanol for corn these past six or seven years, but the biofuel rush is over, and the aftereffects have reshaped the market,” Basse said.
The swing in ag markets leads Basse to forecast $4 corn this fall and a range from $3.25 to $6 over the next decade. Low feed costs will boost producer margins and may finally help feeders dig themselves out of negative margins which USDA Market News reporter Corbitt Walls says have steadily been between -$75 and -$200 per head for nearly a full calendar year.
More affordable feed paired with falling beef production is expected to lift cattle prices. Basse expects cash cattle prices to push higher to reach between $134 and $138 per hundredweight in the fourth quarter of 2013 and higher prices aren’t unreasonable.