Rising enter prices have been continuously on cattle producers’ minds over the past couple of years, with feed prices typically on the forefront. For some perspective, the chart beneath tracks corn costs acquired by farmers as reported in USDA’s month-to-month Agricultural Costs publication. Notice that corn value has greater than doubled because the summer season of 2020, in step with rising prices throughout most feedstuffs. Feed is a direct enter price for a lot of cattle operations and impacts the worth of feeder cattle as it’s the most vital price for cattle ending operations. On condition that feed prices are already at extraordinarily excessive ranges, the scale of the 2023 crop might be crucial.
We obtained our first official take a look at potential manufacturing on Friday, March 31, when USDA launched their Potential Plantings report. This report summarizes producers’ planting intentions within the US and is basically a mirrored image of anticipated profitability ranges for numerous crops. Most notably, corn acreage was estimated to improve by roughly 4% from final yr – to simply beneath 92 million acres. For comparability, soybean acreage was projected to be just about unchanged from 2022. New crop corn futures had been practically flat the day the report was launched, with the December CME© corn futures contract closing at $5.66 per bushel.
One other vital level is that precise planted acreage will adapt in response to additional info, together with this report. Utilizing stocks-to-use from the newest WASDE report back to measure the availability/demand stability, the soybean market seemed to be tighter than the corn market. One may argue that soybeans are in additional want of extra acreage than corn in 2023. Whereas corn costs had been primarily flat, the soybean market did transfer on Friday with a rise in new crop value of about $0.15 per bushel and an much more important improve in outdated crop value. As I wrote this on Monday April third, soybean futures had been up once more. Whereas this image will turn into clearer over the following couple of weeks, one may view this as an try and ration outdated crop beans and appeal to just a few extra acres to bean planting this spring.
Relating to implications for cattle producers, the acreage battle for 2023 is clearly on. Feed costs are presently excessive, and important change shouldn’t be doubtless earlier than harvest. Extra corn acres would undoubtedly be seen as a optimistic from the angle of livestock feed costs. Nonetheless, it’s important to do not forget that planted acres will react to info within the coming weeks. I’d not be shocked if the brand new crop value ratio adjusted such that precise corn planted acreage got here in beneath the Potential Planting estimate. Most significantly, one should do not forget that acreage is only the start. With new crop corn costs on the board North of $5.50 per bushel, climate for the 2023 rising season might be crucial in figuring out the route of feed costs all year long. The total Potential Plantings report might be discovered right here.
