Can We Afford to Feed $4 Corn?
US - By Dan Frobose, OSU Extension Beef Marketing Educator, ABE Center - During the past 40 years we have been schooled on the inherent advantages that the Great Plains has in feeding cattle (environment, proximity to corn and harvest facilities).
7 March 2007
2 minute read
For the most part this has been a fairly accurate scenario. However, with the current focus on renewable fuels the wind may be changing course to the north and east.
I am not going to say that large scale cattle feeding is going to come back to the eastern corn belt. But I would like to point out that there is opportunity to feed cattle as a part of your farm production plan. I crunched a few numbers, feeder calf prices, hot carcass prices and corn prices for the eastern corn belt versus the Great Plains/Midwest. I did not look at historical data over several years but current prices in February. Why, well right now I think we are seeing history making some shifts based on renewable fuels.
Let's compare feeder calf prices from the Midwest and NE United States to the main feeder calf production regions of (Kansas, Nebraska, Dakota's). A 650 pound steer calf sold for $100.78/cwt the 1st week of February. The same calf sold for $91.87/cwt in our eastern region of the corn belt. That's a +$58 difference in favor of the eastern feeder.
Now let's also look at hot carcass prices paid that same week. A steer harvested in the 5 state area (Kansas, Nebraska, Iowa, Colorado, Illinois) brought $139.69 for a base with 80% choice or higher. That same steer in the eastern corn belt brought $1.48/cwt based on a Ohio Signature Beef base bid. The difference is $63 in favor of the eastern market.
Next let's look at corn. The average price of a bushel of corn in Iowa on February 27th was $3.78/bu, in Ohio it was $3.98/bu, that's a 20¢ spread. If we put 65 bushel of corn into that steer it equals a difference of $13/hd in additional grain costs for the eastern feeder. Add up the differences and the eastern feeder has a net advantage in these areas of $108/hd.
Times may be changing. Will the southwest be able to compete for grain and water from the traditional production regions? Will renewable fuels change the dynamics of supply and demand that redirect cattle finishing economics? Keep your pencil sharpened and your calculator handy, we may be charting a new direction in cattle finishing in the U.S.
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