High Corn Prices And Livestock Feeders, Is There A Happy Medium?
Dow Jones reports that the U.S. cattle industry has been on a wild ride the last three months, with volatile corn values making feed costs unpredictable and sending feeder cattle prices plummeting. But, amid the uncertainty, some traders think the price relationship between cattle and corn could finally be stabilizing. “Feeding margins are good,” says James Brooks, analyst and floor broker with RJ O’Brien in Chicago. “There was an over-compensation for the sharp rally in corn, with an even bigger drop in feeder cattle prices. It’s reached a point where large commercial cattle operations appear interested in buying feeder cattle for their feedlots.” The cattle feeding industry has adjusted for the higher corn factor in the cattle price equation by placing fewer young cattle in front of feeding pens, thus lowering feeder cattle prices. March Chicago Mercantile Exchange feeder futures, for example, fell from a high of 99.80 cents/lb. on Jan. 3, to a low of 90.45 on Jan. 16, or 9%. Corn pr
