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Ohio Ag News Headlines |
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Understanding Feed Prices and Feeder Cattle Markets
Ohio Ag Connection - 04/09/2024
Input costs have been a focal point in agricultural discussions, especially amid the backdrop of soaring cattle prices. While high cattle prices have brought optimism, they've also been met with rising production costs across various fronts such as feed, fertilizer, fuel, and labor. Understanding the interplay between these factors and their implications for feeder cattle markets is crucial.
Feeder cattle values are intricately linked to the profitability of finishing cattle, which hinges significantly on the cost of taking feeder cattle through to finish. Among input costs, feed prices emerge as the most impactful, directly influencing the cost of gain in feedlots. Notably, the projected cost of gain closely tracks the price of corn per bushel, reflecting the critical role of corn in feedlot operations.
As feed prices fluctuate, so do feeder cattle values. Lower feed prices contribute to higher feeder cattle values as feedlots can afford to pay more for feeders. Conversely, higher feed prices exert downward pressure on feeder cattle values. Additionally, finishing costs influence the value of gain on feeder cattle, leading to market adjustments favoring heavier feeders during periods of elevated finishing costs.
Planting intentions, as indicated by USDA's Prospective Plantings report, play a pivotal role in shaping feeder cattle markets. Shifts in acreage allocation for principal crops, particularly corn, impact feddsupply, thereby influencing feed prices. The recent report signaling a potential decrease in corn acreage suggests the likelihood of tighter corn supplies ahead, prompting market reactions and adjustments.
In essence, the dynamics of feeder cattle markets are deeply intertwined with feed prices and planting intentions. Understanding these relationships enables stakeholders to navigate market volatility and make informed decisions amid evolving agricultural landscapes.
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