Source: Rita Jane Gabbett, MEATINGPLACE, 11/1/16


The monthly average price of corn received by U.S. producers has been less than $4 per bushel for 27 consecutive months and prices below $4 are expected to persist well into 2017, writes University of Illinois professor emeritus Darrel Good in the university’s farmdoc daily.

Expected larger South American corn supplies on the world market next year would contribute to keeping U.S. corn prices down. Brazil production is expected to rebound from last year’s drought and Argentina is expected to expand corn area due to reduced export taxes. Meanwhile, U.S. farmers are just finishing harvesting a large corn crop.   

This is a bit of good news for livestock producers and vertically integrated processors, particularly since the prices they are receiving for the livestock they sell and the meat they produce have also declined.

USDA’s latest Food Price Index showed retail beef and veal prices in September were down 7 percent from last year, while pork prices were down 3.6 percent and poultry down 1.5 percent.

On the live side, fed cattle are now bringing $600 to $800 less and some calves are selling at half of what they brought just a few years earlier, according to Certified Angus Beef’s Larry Corah.

“The weak grain market finds some relief in the form of lower production costs. Will this offset the staggering price decline? No, but it will help some,” wrote Corah.

National lean hog prices dropped below $40 per hundredweight in October, the lowest since 2008 and 2009 when the recession weakened meat demand.

Purdue University economist Chris Hurt predicted live weight prices would average in the high $30's this winter then climb to the mid-to-upper $40s for the second and third quarters of 2017. Hurt noted in farmdoc daily, however, that even with lower feedgrain prices reducing cost of production to about $47 to $48 per live hundredweight, hog producers would still not be breaking even.     

The likely winners in all of this could processors not vertically integrated, as their cost of raw materials should remain low going into next year.  

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