March 6, 2015

Value-based marketing for feeder cattle...what's corn's role?

"Next time you drive by a corn farm, salute the corn farmer!"

I heard this saying from Tom Brink of Top Dollar Angus recently when I attended a symposium for cattlemen that talked about the cattle markets and what the key drivers for 2015 and beyond look like.  2014 was obviously a banner year for cattlemen with unprecedented prices and all segments of the cattle market remaining strong.

 Brink gave four key drivers for 2015 & beyond:
  • Corn
  • Continued tight cattle numbers
  • Relatively strong beef demand
  • Larger competing meat supplies
Corn. We've seen an obvious downturn in corn prices the past year because of large supplies. Cattle feeders are taking advantage of this and feeding Nebraska high-quality corn. This might sound like a disadvantage for corn producers - while some are producing at the cost of production - but without corn, we would not have the markets, quality and prices for cattle and beef, said Brink.

Continued tight cattle numbers. The U.S. cowherd is growing. But slowly, as we've recently seen from the U.S. cattle inventory report. In Nebraska, total cows and calves are up 1% from last year to 6.3 million head. But that doesn't grow overnight. Producers are trying to keep back more replacement heifers, but the cattle prices being high are tempting them to sell.

Relatively strong beef demand. Thanks to the U.S. Meat Export Federation, and support from state checkoffs like the Nebraska Corn Board, international beef demand is soaring. Beef demand continues to rise, especially has more countries, like India and China, have a rising middle class. Domestically, beef demand isn't as high with strong competition from poultry and pork. But the beef checkoff continues to promote beef as a healthy protein.

Larger competing meat supplies.  While cattle numbers are growing slowly, pork output this past year increased 5.4% and poultry increased 3.9%. This drives prices for competing meats down.

What are the results of these key drivers? More opportunities for cow-calf producers. Which will hopefully equal expansion, more head of feeders to consume more high-quality Nebraska corn!

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