The U.S. Department of Agriculture lowered corn and soybean ending stocks in its February World Agricultural Supply and Demand Estimates report.
Dwindling stock piles, boosting corn and soybean futures, may impact the feeder cattle market, according to Dr. Derrell Peel, Oklahoma State University livestock economist.
“This year’s supply of feeder cattle is already on the ground, so those cattle are going to come through the system and be fed,” Peel says. “Individual feed lots are making decisions every week about – Do I want to buy pounds or do I want to put more weight on the lighter weight cattle in the feed lot? As cost of grain goes up, they are going to be more interested in buying some of that weight and not put as much of that expensive feed in cattle.”
“I don’t think we’re seeing that corn price effect showing up in the feeder cattle market yet,” says Peel. However, we very well could in the next three- to five-months.
“There’s a number of factors that go into this,” Peel says. “The overall price of level for feeder cattle is likely to be pressured a little bit by high corn prices, at least in an all-else equal world. If fed cattle prices are stable, then feeder cattle prices likely get lower with high grain prices. Again, within that feeder cattle complex, high grain prices would tend to reduce demand for lighter weights relative to heavier weight cattle.”
