Monday, November 1, 2010

Don't complain about high corn prices

Despite what you might read in Drovers or Beef, high corn prices are actually good for the cattle industry for a number of reasons. First, our two big competitors (chicken and pork) are much more reliant on corn for gain than we are...true they are more efficient gainers, but unlike cattle, they can't substitute grass gain for grain gain. And that's the key. Stop thinking about yourself as a beef producer and start thinking of yourself as a grass producer...the cattle are simply your combine. Since grass can be a direct substitute for grain, the higher the price of grain, the higher the value of's really as simple as that. I love high corn prices. I hope corn goes to $8 and stays there. Cow/calf producers will see some downward pressure on calf prices, but it will be the price of competing meats goes higher, the value of beef will go higher, that will bring calf prices back up. For grass stocker operators, high corn is a beautiful thing. If feedlots cost of gain is $1, they will be willing to pay something close to that $1 for grass/forage gain. The future looks bright.

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