Last year the dry weather in much of the corn producing areas of the United States resulted in much lower yields that, in turn, drove grain prices up.
Agricultural Economists are predicting more corn to be planted in 2013 and with a little bit of help from Mother Nature, that could mean good news for livestock producers.
“Coming out of a year like 2012 where we saw record high prices for corn and soybeans, and very high prices for wheat as well, and as a response to that high prices are performing their economic function, and that is to encourage producers to produce more and users to use less.”
Mark Welch is a Texas A&M Agrilife Extension Economist, and he says that world stocks of corn are as tight as they’ve ever been.
“That sets the stage for 2013 of increased production, with anything close to normal weather in the major corn producing areas. We’ll see an increase in quantity demanded, that will come up as well, but typically not as quick or as fast as we see an increase in production, and that will cause an over-supply in the near term, and we would suspect substantially lower prices.”
For the last few years, our nation’s livestock herd has continued to shrink.
“Since 2007, the total livestock herd of the United States, beef, pork, and poultry, has been on the decline as a result of higher grain prices, but more importantly than that, is the amount of grain that we’re feeding to each of those animals. Total numbers are down by about five per cent since 2007. Grain per animal is down eighteen per cent. So we have lower numbers and less grain per animal.”
In an effort to survive the high grain prices, livestock producers had to use genetics and alternative nutritional technologies.
“If we see lower grain prices in 2013, with anywhere near normal production, those efficiencies that they’ve been able to achieve, they’re not going to give those back right away and that will enable perhaps some degree of profit margin, if our livestock producers then can take advantage of lower grain costs.”
I’m Kailey Carey, looking at Brazos Valley agriculture, From The Ground Up.
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