a division of Jupe Feeds, Inc.
Grain markets continue to be volatile. Planting activities are behind normal levels due to wet field conditions. This helps fuel volatility but in the end the acres will get seeded. Corn acres are being expanded to replace some other traditional grains.
This is driving wheat and soybean markets higher. Corn demand continues to expand. Export demand is projected higher along with expected record demand for food, seed, and feed usage. A 46% increase in corn usage for ethanol production is forecast for this crop year. So, livestock feeders can expect to see continued strong prices through the summer. As we watch what I predict will be the largest corn harvest ever recorded.
Once again market topics center around incresing competition for the U.S. corn crop. Looking for price reductions in the livestock feed markets?
Some things to consider:
High corn prices are slowing the construction of new and planned ethanol plants.
Expect corn demand for fuel to stay at or above current levels.
The percentage of the 2007 corn crop going to fuel plant will be +/- 17%
The percentage of the 2007 corn crop going to export will be +/- 18%
These percentages won't be lower in the 2008 crop year.
Crude oil prices at $100+ /barrel is increasing demand for alternative fuels.
Expect 2008 farm level corn prices to start at about $4.00 /BU in the corn belt.
Crop conditions this summer could change that to $5.00 or more.
This is not a pretty picture; however, don't expect feed prices to be a concern to the candidates running for office this year. They have other costs in the economy that makes for more votes.
FEBRUARY
Are feed prices high enough yet? Not according to speculators in the commodity futures market. By mid January corn contract prices were surging from the lower $4.00/BU levels to well above $5.00/BU. This translates to feed corn costing around $180.00/ ton for elevators. Transportation cost added to that makes corn worth close to $200.00/ ton before processing. Is there relief in sight? Not if we look ahead to the July '09 corn contract trading as high as $5.40/BU in recent trading sessions.
High feed prices will be with us this year. Projections for corn production reaching 14 to 15 billion BU in the next couple of years are being predicted in the U.S. If soon enough, we may get some pull-back on the pricing stucture of livestock feeds around 2009 or 2010.
In the meantime we continue buying dips like were seen in the last week of January when prices turned down for several sessions and then saw a twenty cent limit down close on January 23rd. Expect corn to trade from $4.85/BU to $5.15/BU through the '08 crop year.