11/30/06 Cattle, corn and trading

Corn, Cattle, and Trading I never realized how important a corn crop could be, but I'm learning. I'm Jeff Keane; I'll be back in one minute with some thoughts. Corn has always been an important crop to the U.S. agricultural economy and is used as a standard to evaluate other grain crops. Relative feeding value of different grains for any species of livestock is based on the feeding value of corn for that species. Occasionally, small grain prices will somewhat follow corn prices. Prices offered for feeder cattle are also dictated largely by corn prices. Higher corn prices mean higher feed costs for finishing cattle for market, so feeder cattle prices are adjusted downward. At a recent meeting I attended, one person was blaming the dip in feeder calf prices on increased imported cattle and beef, not corn. A voice from a cattle feeder in the back of the room assured the individual corn prices do dictate cattle prices and related figures to back up his statement. Corn prices this year are not higher because there is a small crop, but it still has to do with supply and demand. Projected increased ethanol production from corn has a lot of people thinking corn supplies might become tight. With this thought in mind, the futures traders are betting corn will go even higher and to me this is creating the high corn prices and lower cattle prices. It all depends on which commodity you produce whether you think paper traders are detrimental or beneficial to a market. I'm Jeff Keane.