What a difference a year makes. Livestock Marketing Information Center data shows that last year at this time, Omaha corn was pricing at $3.46/bu., compared with just over $2 the year before. For the week ending May 10, 2008, corn price was $5.90/bu., a jump of 70.5%.
Pulled along in King Corn's slipstream, prices for other grains were up dramatically as well. Kansas City wheat was at $8.01/bu., up from $4.74 a year earlier, a 69% jump; and southern Iowa soybeans were at $12.89/bu., up from $7.19, a 79.3% increase.
And if a livestock producer's nerves weren't already sufficiently frayed, USDA reported that, for the week ending April 27, planting was behind both in expectations and the five-year average for all crops except spring wheat, thanks to water-logged fields. Only 10% of corn was planted, compared to 20% for 2007 and 35% for normal.
With 25-30% of the 2008 U.S. corn crop mandated to ethanol production, and grain-hungry Eastern economies enticed by the weaker U.S. dollar, U.S. livestock producers are finding the competition for the rest vigorous.
Life, they say, is what happens to you while you're making plans; these days, life is happening fast. Every week seems to bring more market-jostling news, all driven by the leapfrogging prices for energy.
As of early May, crude oil prices had climbed more than 30% this year, blowing through $115, $120 and even $125/barrel. Speculative fever has given rise to talk about the price of crude even reaching $200.
As of May 12, 2008, the average price of regular gasoline at retail was at $3.72/gal.; diesel was $4.33/gal., almost $1.56 over the previous year's price.
Cow carrying costs have increased $100/head on average during the past few years, says Cattle-Fax CEO Randy Blach, and he expects we'll see them increase another 10% this year. Meanwhile, feedyards scrambling to stay full in the face of ever-increasing breakevens are facing huge losses.
Needless to say, “volatility” is once again this year's byword for life and business, which makes planning awfully tough.
For our annual state of the industry report, we decided to contact four industry experts for their take on what lies ahead in the areas of the economy, beef demand, trade and politics. Participating are: Randy Blach, Cattle-Fax CEO; Tom Field, Colorado State University professor; Bill Helming, agriculture economist; and Bill Mies, industry consultant.