In last week’s Southern Ag Today article, Andrew Griffith discussed whether the ranchers should feed or breed their heifers in the current market. He stressed the relevance of feed, capital, and labor costs. Here, I briefly discuss the prices of two crucial feed inputs: corn and hay. Along with pasture quality, these inputs are essential for herd recovery and expansion.
While cattle prices continue to have an upward trend, corn markets show a different pattern. Global ending stocks (311.05 MMT) and plentiful production in the U.S. (15.1 B bushels) are driving corn prices down (Figure 1). Last August, corn prices hovered above $7/bu. Recently, corn is trading below $5.50/bu. Of course, lower corn prices boost feeder prices.
Figure 1 – 600-900 Feeder and Corn Prices: Aug/2022 – Aug/2023
The price and availability of hay is also crucial to the decision to retain animals. Hay is the 3rd largest crop in the U.S. by number of acres harvested (USDA-NASS). Figure 2 contains U.S. average hay prices. Fertilizer and fuel costs swelled forage production costs and drought cut production in many areas of the country. Higher hay prices than last year suggests we are still suffering from the effects of drought.
Figure 2 – Hay Prices
USDA’s latest hay production report indicates some growth in hay inventory. Nationwide, hay supplies are expected to rebound about 5 percent compared to last year. But, longer term, hay production has declined 24 percent over the past 20 years. Yields have declined from 2.48 to 2.29 tons/acre during the same period.
While much of Louisiana and Texas remain in drought, most of the rest of the South is drought free. Less expensive feed and better pasture conditions may provide opportunity for some herd growth.
References
Griffith, Andrew P. To Breed or To Feed? Southern Ag Today 3(34.2). August 22, 2023. Permalink
USDA – NASS (2023). Available online: https://quickstats.nass.usda.gov/
Beef Cattle Decision Aids. Available online: https://agecoext.tamu.edu/resources/decisionaids/beef/
