As corn prices continues to rise in response to the needed demand, many farmers are considering turning grassland to farmland. Troy Marshall argues that this will only hurt beef cattle production.
A lot of the experts have been predicting $8/bu. corn, not necessarily because they believe corn will be that high but because the market will need to push that high to ensure enough acres are planted in corn. The gurus refer to this as “buying acres.” By the way, recent calf prices are the market’s attempt to buy more cows to go into production as well.
I have little doubt that we’ll find the additional millions of acres that the market is demanding be planted. The market is an amazing thing, but the downside is that we’re seeing pastureland and hay ground being converted to farmland, and grain production being selected over livestock production as a result.
There are lots of implications to these changes. Even in our area, a locale where ethanol byproducts aren’t readily available and far more expensive, we’re seeing the ration of choice move from silage-based to distillers and corn stalks. USDA isn’t showing a decrease in hay acres to this point, but time will tell; producers may have to buy hay acres in the short term.
The bottom line is that regional basis differences can be expected to be magnified as well, as transportation costs will make it more difficult to move feed and other inputs long distances.