July 2013
For What It's Worth

Get Ready to Watch Feed Prices Rollercoaster

Those of you who rely heavily on grain-based feeds for your livestock are well aware feed prices have not declined significantly this past year, and you are probably wondering what to expect this year. We all know, at one time this past year, soybean hull and corn gluten pellets hovered around $300 per ton. In late spring of 2013, grains and grain-based feed prices did not lower to give us some reprieve as traditionally expected. They normally decline as situations stabilize in spring and expectations for a hardy, summer-growing season ease concerns over shortages. Based on conditions we have seen this spring and are already hearing via USDA and other resources, I suggest those who rely on grain-based feed for livestock get ready for a feed price rollercoaster the remainder of this year and into 2014. Keep in mind this article was written in May 2013 and variables can do what they do best, so keep an open mind, and plan accordingly and efficiently.

My opinion is based on the following. Many areas throughout the U.S. have experienced an exceptionally abnormal cold and wet spring. I am referring to the Great Lakes, Midwest and Southeast regions. We all know the Great Lakes and Midwest regions are our corn and grain belt for feed-based production. Due to aforementioned conditions, all three regions have been late planting relevant crops and the same crops have been slow to emerge.

I have been watching USDA and industry-related reports and they all say the same: late planting and emergence due to climate and soil situations, grains and grain-based prices are reasonable at this time, drought is anticipated in many regions, and nobody knows what to expect. The "sunshine" in all this? States in the North-central and along the Great Lakes regions are getting their crops established and experiencing emergence ahead of everyone else, including the Southeast.

What to do, what to do? By the time you read this article, all we can do is accept what happens with every attempt to plan ahead, determine how our farms can best cope with this situation through 2014, and put forth our best efforts. Assuming you manage livestock, consider the following suggestions: (1) Have a rotating and stockpiling forage plan in effect. (2) Reduce herd inventories if necessary; better too few than too many. (3) Accumulate sufficient quantities of hay to get your animals through fall, winter and spring. Remember, fresh forage availability generally takes place in late spring in most regions. Quality hay is more affordable than grain-based feeds. (4) Shop around for quality, affordable feeds.

With a plan like this, your farm is more likely to sustain itself. The good news is more corn has been planted this year due to high expectations. The bad news, less cotton has been planted due to ever-increasing cost of production. For those who use gin trash and cotton seed in their feeds because it is less costly and a good source of protein, it will be less available and feed prices more costly.

Other bad news: demand for grain-based feeds is expected to increase this year.

The good news is inventories of beef, goats and sheep are not sufficient to drive up demand, but the bad news is pork and poultry numbers are on the rise.

There is little or no control over these situations. Everyone wants to bemoan the fact how unfair it is and try to point fingers. Sometimes people want to blame the feed companies; but, trust me, they are a business and trying to keep prices affordable. It all comes down to whether climatic conditions are favorable or unfavorable to production and yield situations, and then how simple supply and demand situations affect prices. Plan and prepare, evaluate and adjust, and learn and adapt efficient and productive methodologies.

Resources:

http://farmdocdaily.illinois.edu/2013/05/corn-soy bean-prices-retrace-2012-rally.html

http://www.thecropsite.com/reports/?id=2110

http://www.thepigsite.com/reports/?id=2044

Robert Spencer is an Urban Regional Extension Specialist with the Alabama Cooperative Extension System.