Higher grain price effect not likely on cattle herd size
An ag economist does not see a big impact on cattle herd size this year from rising corn prices. Darrell Peel with Oklahoma State University, on an American Farm Bureau Convention outlook panel, says the higher corn prices will ‘sort of’ affect how feedlots want to do business.
“It doesn’t, on the face of it, mean that feedlots don’t want to feed cattle. But, they’re going to look at sort of what kind of cattle, particularly what size of cattle. To some extent, quality factors may be re-evaluated.”
Peel says higher feed prices, all else being equal, means lower margins for feedlots but not necessarily lower herd weights, “I don’t think we would necessarily see an immediate impact of higher feed prices sort of changing the trajectory, if you will, of the herd dynamics that are kind of in place.”
He says feed prices could temper herd weights a little, depending on where feed prices end up. In addition to the global markets driving demand for feed grains, he says it will depend a lot on what kind of crop year 2020 will be, with weather a big factor. Peel says increased drought combined with higher feed costs would become a broader forage-based situation.