April 2021 Cattle Feeding Projections
Corn is the topic of every conversation. With the set up of southern dry climates, Brazilian corn struggling and cooler weather in the north with drier conditions, corn is the major player in cost of gain. Soaring past $6.00/bu, both the northern and southern region of cattle feeding are seeing cost of gains (COG) well over $1.00/lb.
The ole adage of high corn, high cattle seems to depend on the day as the futures market continually gives and takes back any gains projected for the cattle feeder.
The impact that corn price has on all other commodities is ever apparent when paying cash to mouth for commodities. Farmers and ranchers who have enough corn and harvested feedstuffs to finish cattle until new crop is harvested are sitting a little better than those paying current market prices.
Distillers continues to follow corn price, albeit once June cattle inventories have been harvested supply should lighten up and lesson price of both wet and modified distillers. Rail and shipping of dry distillers grains continues to keep this an overpriced product for local feedlots that can handle higher moisture distillers. Silage and earlage prices continue to rise if purchasing from neighbors. Remember to price these products based on quality and not just the 10% rule.
Cattle futures vs packer cash bids continue to be at historical differences. Normalizing basis trends in finishing cattle has been nothing but as feed yards continue to sell at a negative cash basis even with boxed beef prices climbing. Global demand for high quality beef is increasing as the world tries to get back to ‘normal’ pre-covid habits. Packers continue to keep the upper hand and margin when buying and contracting cattle. Most plants continue to be three to four weeks out from bid time, which allows packers to keep the upper hand and pushes cattle to higher weights.
With current prices cattle should continue (or start) to sell at lighter weights. Purchased cattle will go into background yards or grass where fiber will be converted to pounds. Finishing cattle will look to finish on lighter energy rations to try to keep COG in check.
Make sure you know your COG when purchasing cattle and continue to minimize risk by locking in and understanding as much of your commodity prices as possible.
Your local Form-A-Feed representative will be happy to run you personalized projections to help make both marketing and inventory decisions.