Corn
Ethanol use along with poor planting and growing conditions produces a projected 2008 corn price of $6 to $6.25 per bushel with spikes up to $8 a bushel. Corn prices now are $3 per bushel higher than six months ago. These price levels will ration corn use.

Fed cattle
Factors point to very tight beef supplies: Exports are up, and imports and feedlot placements are down. As a result, the trend for fed cattle prices will be up.

Feeder cattle
Feedlots have 25% more bunk space than there are cattle. Consolidation means that feedlots will continue to bid on a limited supply of feeder cattle, even when purchased at a loss. Feedlot managers will also promote retained ownership to cow/calf producers in order to reduce their risk. In time, enough feedyards will close, bringing demand more in line with supply and lowering feeder cattle prices.

When this happens, remember that a $1 per bushel increase in corn price equates to a $12 to $14 per cwt. drop in feeder cattle values. The result will be an extremely volatile feeder cattle market as the corn market gyrates with changing supply forecasts.

Locally, fall-selling feeders could be equally priced to $10 per cwt. lower than feeder cattle sold in fall 2007. Yet, my West Virginia friends also remind me that cattle prices are always higher in an election year.
Mike Baker is the Beef Cattle Extension Specialist at Cornell. Reach him at 607-255-5923. Email: mjb28@cornell.edu. For beef information and updates, see this website: www.ansci.cornell.edu/beef/
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