With everything that has been going on in the market the last couple of weeks, a good majority of us have been anxiously awaiting the Corn Market Report to come out, am I right?
As of August 12, 2019, Northern Ag Report released the crop report and it has been a surprise to many due to the increase of corn production to 13.9 million bushels, which raised the average national yield to 169.5 bushels per acre. According to the USDA’s planting survey, 76.7 million acres of soybeans were planted and is projected at 3.68 billion bushels. This brings us to a 19% drop from last year.
The pre-report estimates for corn were 13.164 billion bushels but the actual report came in at 13.9 billion bushels (bb) and the average farm price for corn is projected at $3.60 per bushel.
So, what does the corn market report mean for us?
I for one, am not that surprised to hear that there is more corn than anticipated. I know a lot of farmers that ran into more issues planting than usual, making corn come down in price. Naturally, we expected cattle to trend up however, this happened to hit at the exact same time as the Tyson Plant fire. We are seeing an inverse reaction between the two and as of Thursday morning, August 15, live and feeder cattle were up and so was corn. This is not a typical flow of the market and I believe it is a knee jerk reaction from the down that was slightly overplayed from the Tyson Plant fire. Corn is still up and I think we need to be cautious of that and a vast majority are still considering a .92 cost of gain, which is a little higher than in years past. In past years we have seen it hover around .85. When you feed cattle, a .92 cost of gain makes a big difference, especially when you consider all the factors we are facing today including the volatility of the board.
Another point I want to make is that a good portion of these northern cattle are headed to Canada and not only do we have to take into account the numbers for corn but for barley as well.
You know that saying, “Comparing apples to oranges”…. It applies to cattle too. Go Figure!
That being said, I want to emphasize that you need to really pay attention to those numbers that apply specifically to you and your operation based off your genetics, for example, where you are, where your cattle will be headed, etc. Make sure you are running break-evens on your cattle and really assessing what your cattle are actually worth being that we are getting pretty late in the season and that the corn report didn’t have the effect that a lot of us were hoping it would. Furthermore, it is still time to sell the calves and get a forward contract in sooner rather than later. We are launching our bi-weekly newsletter to bring you breakdowns of the cattle market and how to apply these trends to your operation. Chute From The Hipwill help get you on the right foot to make the right decisions so don’t miss out!
If you would like to read the report yourself, Click Here