FarmWeek Page 9 Monday, November 2, 2009
LIVESTOCK
Livestock producers may see better prices in 2010 BY DANIEL GRANT FarmWeek
Livestock producers who are able to survive the current economic crisis could see better pricing opportunities by next year. Economists and a livestock industry leader recently predicted economic recovery around the world will spark demand for meat, milk, and eggs. “When the economy recovers, demand will return,” Scott Brown, program director for the Food and Ag Policy Research Institute at the University of Missouri, told FarmWeek at the recent American Farm Bureau Federation Commodity Outlook Conference. Brown pointed to “dreadful demand” the past year as one of the main reasons that meat and dairy prices dropped to below break-even levels. Consumer demand from January through July reportedly declined 1.5 percent for beef and 3.5 percent for broilers. Meanwhile, the demand index for dairy products
dropped nearly 20 points, according to Brown. “This came at a time when we had higher feed prices,” he said. “I think we (in the livestock industry) could’ve dealt with one or the other. But the combination (of lower prices and higher input costs) has been hard to deal with.” Quarterly U.S. meat exports slipped from about 3.5 billion pounds in 2008 to nearly 3 billion pounds this year as demand dwindled around the world. Brown predicted U.S. meat exports in the coming year could improve due to the lower value of the dollar. “If you believe the economy is improving, and it will improve, prices could rebound,” he said. Brown predicted prices in 2010 could climb above $90 per hundredweight for cattle, $50 per head for hogs, and $16 per hundredweight for all milk based on the strength of increased demand. Joe Glauber, USDA chief economist, made similar projections, forecasting prices
next year could average $90.50 for cattle, $44.50 for hogs, and $15.15 for milk. “I think we will start seeing a recovery in the livestock market by year’s end with higher prices forecast for 2010,” he said. A return of demand also should bring the price of various meat cuts back to more traditional relationships. Brown noted that demand for higher-priced meat cuts took the worst hit during the current recession. The price of higher-quality chicken breast, for example, recently was $1.20 per pound compared to $1.40 per pound for wings that were of lower quality but in greater demand. “One of the last things to go out of a consumer’s diet (during a recession) is meat products,” Jim Fraley, Illinois Farm Bureau livestock director, told the RFD Radio Network. “One of the first things to come back is meat and dairy products. Hopefully, we will see that recover very strong in the coming months.”
New program allows producers to calculate cost of feed rations A new program is available to help livestock producers sift through many available feed options and determine the best ration for their animals. The “Cost of Feedstuffs Calculator” developed at the University of Illinois is a new Farm Analysis Solution Tool (Fast) available online at {www.farmdoc.uiuc.edu/pubs/FASTtool_special_feedstuffs.asp} The program also can be accessed at the U of I Illini DairyNET and Illini BeefNET websites {www.livestocktrail.uiuc.edu/} and at the website of the Illinois Value Added Sustainable Development Center at Western Illinois University {www.valueadded.org/renewableEnergy/ethanol/ddgs/}. The cost of feed is the most expensive part of dairy and livestock production, according to the U of I. Co-products from ethanol production have added feeding options for producers, but they FarmWeekNow.com also can have varying moisture Check out the latest U of I online levels and nutrient value. Also, f e e d s t u f f c a l c u l a t o r s a t storage losses can be quite FarmWeekNow.com. variable among the different products. The calculator allows livestock managers, consultants, and veterinarians to compare the cost of purchasing and transporting, 120 different feedstuffs including a number of co-products, byproducts, grains, forages, crop residues, silages, and supplements. Storage losses also can be determined. Each of the feedstuffs can be compared to No. 2 shelled corn, 44 percent soybean meal, and mid-bloom alfalfa hay. Groups of different feedstuffs also can be compared and ranked on a “cost per pound of energy” or a “cost per pound of protein” basis. Support for the development of the new program was provided by the Illinois Corn Marketing Board, the U of I Extension, the U of I department of agricultural and consumer economics, and the U of I animal sciences department. For more information about the program, contact Mike Hutjens, U of I Extension dairy specialist, at 217-333-2928; Dave Seibert, U of I Extension animal systems educator, at 309-694-7501; or Gary Schnitkey, U of I Extension farm management specialist, at 217-244-9595.