Harrington's Sort & Cull

Order the Turkey, And Make It a Big One

By John Harrington , DTN Livestock Analyst

Now that the USDA has essentially confirmed a monster corn harvest of 14 billion bushels, livestock feeders can look forward to one of the most heartfelt Thanksgivings experienced in years.

I can almost hear the holiday hallelujahs rolling from here: "Free at last, free at last, thank God Almighty we're free at last."

Meat producers have been economically enslaved by $7 corn for nearly three years, a bondage costing billions and billions in terms of equity loss and financial ruin. Despite reasonable growth in both domestic and foreign meat demand since 2011, even the country's more efficient producers found it impossible to convert gold into silver and make it pay.

But now that planting ambition and the largess of Mother Nature have successfully conspired to produce enough corn to overwhelm the huge combined appetite of feedlots, finishing floors, ethanol plants, and exporters, plans to change grain into meat no longer seem as dubious as alchemy and pyramid schemes.

How much has changed? Taking a quick and dirty assessment of the cost of meat production across the board, I figure a $3 break in the price of corn amounts to a savings of nearly 40 cents per pound. So if U.S. producers plan to deliver roughly 93.2 billion pounds of beef, pork and poultry next year, it should take $37 billion less to finance 2014's total feed bill.

Did someone say "pass the turkey"?

(AG)

Comments

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Unknown 11/26/2013 | 10:54 AM CST
Tim Hume is spot on
TIm Hume 11/13/2013 | 7:36 AM CST
John,

While lower corn prices may help integrated hog and poultry producers, cattle feeders will, in an effort to fill their abundant pen space, simply bid feeder prices higher up to their new breakeven.

The consequences of ignoring the real cause of poor fed cattle economics are real. The NCBA continues their misguided attack on ethanol, when the real cause of their hardship is the combination of record low cattle numbers and a lot of empty pen space.

I would appreciate more reporting on this issue.

Thanks,

Tim Hume