Several major trends are shaping the world economy, and their effects are becoming increasingly apparent to U.S. beef producers, experts told participants at last week’s Range Beef Cow Symposium in Fort Collins, Colo.

Cattle-Fax Executive Vice President Randy Blach named one of these trends that has gone largely unnoticed in agriculture — the historically low value of the U.S. dollar relative to foreign currencies. The weak dollar favors exports of American commodities, Blach said, with positive and negative results for beef producers.

On the downside, international demand for U.S. grain is high, contributing to wheat prices that topped $10 per bushel last week and corn prices that have inched upward since harvest, in spite of the largest U.S. crop ever.    Demand in the export market, as well as from domestic ethanol production, is driving corn and wheat ending stocks to their lowest levels since the 1970s.

Looking ahead to next year, Andy Gottschalk, owner of HedgersEdge.com, LLC, told producers that early indications suggest high prices for soybeans, wheat and other crops will cause U.S. farmers to plant four million to seven million fewer acres to corn next spring. Plantings at that level, he said, will put production dangerously close to expected demand, and a 25-bushel-per-acre difference in average yield could make the difference between corn priced at $3.50 per bushel or $5.

The bright side of the weak dollar is that increased buying power overseas is driving export demand for U.S. beef, Blach said, adding that exports should increase significantly during 2008. South Korean consumers today, he notes, have 28 percent more buying power for U.S. commodities than they did in 2003 when our beef was locked out. During the brief periods when the Korean market was open to U.S. beef this year, sales of just two cuts — short ribs and short plates — added $18 per head to the value of finished cattle.

Domestic cattle inventories remain flat and beef demand looks good both here and abroad. Unless something happens to next year’s corn crop, Blach expects 2008 prices for all classes of cattle to remain similar to those seen this year.

Fuel prices, of course, also are affecting the economics of cattle production. Blach notes that cash-basis discounts for feeder cattle in the Southeast and in the West, relative to prices in the Central states, are ranging near $6 per hundredweight. The reason is the higher price of transporting those cattle to feedyards or stocker operations in the middle of the country.

There has been some speculation that ethanol production in the Midwest will favor more cattle feeding in that region to take advantage of available distillers’ grains. Gottschalk, however, says don’t count Southern Plains cattle feeders out yet. Fed-cattle prices in Iowa and Nebraska have been declining relative to Texas recently, he says, primarily because most of the packing capacity remains in the South. Southern Plains cattle feeders have higher costs of gain but are receiving higher bids because of lower transportation costs in a time of high fuel prices.

Gottschalk also noted that the price ratio between 400- to 500-pound calves versus 700- to 800-pound feeders could be headed toward the lowest levels since 1996 and 1997 when corn prices spiked in the $5-per-bushel range.