February 2012 Articles

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Livestock Market News - Situation and Outlook, Week Ending January 27, 2012

Livestock Market News - Situation and Outlook, Week Ending January 27, 2012 VOLATILE CORN PRICES EXPECTED TO CONTINUE: Livestock and poultry producer margins were whipsawed by feedstuff costs in 2011. Between mid-December 2011 and the first week of January this year corn prices at Omaha increased 56 cents per bushel to $6.34. For the first week of January, Omaha corn was 58 cents above a year earlier. Recent price increases were driven by unfavorable growing conditions in Argentina and Brazil. Tight U.S. stocks set the stage for continued corn price volatility and the potential for significantly higher prices at least well into the spring months. In calendar year 2011, the lowest Omaha corn price of the year occurred in the first week ($5.76 per bushel) and the high was in mid-June ($7.66 per bushel). Last calendar year, 19 weeks recorded a weekly Omaha corn price above $7.00 per bushel and price fell below $6.00 in 4 weeks. U.S. corn prices might erode in coming weeks if consistent moisture returns to South America. But expectations for the North American corn crop will soon be the market driver. In recent years, at the Agricultural Outlook Conference (February 23-24) USDA’s Chief Economist provides a preliminary forecast of crop acreages to be planted and assumes trend-yields. The first producer-based survey will be released by USDA-NASS on March 30 (Prospective Plantings report). In the meantime, most market analysts are looking for more corn acres to be planted this year than in 2011. In 2011, U.S. corn plantings were 91.9 million acres. But as the corn growing season progressed yield and acreage harvested both declined more than expected, with the yield dropping to under 147 bushels per acre. For 2012, there is a wide range of expectations on corn acreage, mostly ranging between 92.5 and 94.5 million acres. Of course, corn prices over the next few months will be a factor in farmer decisions to plant corn, as will their production costs. Any U.S. corn plantings over 92.5 million and with a normal yield in 2012 will likely result in lower corn prices. For example, the preliminary LMIC forecasts is for corn plantings of about 92.6 million acres and a yield of 158 bushels per acre. That level of production could translate into a 2012-13 crop marketing year price drop of about $1.00 per bushel compared to this year’s price (2011-12 average price received by farmers forecasted at $6.40 per bushel). Source: Livestock Marketing Information Center (www.lmic.info)