Several major trends are shaping the world economy, and their effects are becoming increasingly apparent to
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
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
The bright side of the weak dollar is that increased buying power overseas is driving export demand for
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
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.