Murphy projects corn, hay prices to stay level in 2018
As cattle producers saw a moderate increase in the size of the cattle herd on Jan. 1, the availability and price of feed will continue to impact the profitability of producers in every segment of the industry.
Looking at trends from the past several years, however, CattleFax Analyst Mike Murphy projected both corn and hay prices will stay relatively flat in 2018. Murphy looked at the feedstuffs market during a Jan. 24 Trends+ webinar hosted by the organization and sponsored by Elanco Animal Health.
Corn supply
Over the last 12 years, corn stocks have been as adequate as at any other point in time, said Murphy.
During 2016 and the first half of 2017, he explained corn prices stayed between $3.50 and four dollars a bushel.
“Looking forward, current supply continues to support that sort of a price range for corn,” he said.
However, weather will be a fundamental factor affecting the future of the corn markets, he noted.
“Most of us are aware we have been in a La Niña weather event,” Murphy explained. “It has been dry through the Central and South Plains. The forecast is we’ll transition into an El Niño event this spring, which will bring some moisture through the Midwest, which is the key region for corn production.”
Generally, however, Murphy does not see a significant change to corn supply in the near future.
“We don’t expect significant change to the supply – not only for this spring but also looking forward into the second half of the year,” he said, projecting a 16 to 17 percent stocks to use ratio. “If Mother Nature cooperates, we should be in good shape for corn prices.”
Looking at market fundamentals, Murphy noted a practical range for corn prices to continue at the $3.50 to four dollar level.
Hay prices
Looking at hay supplies, prices have stayed flat for the last several years, said Murphy, noting price stability directly reflects the stability seen in hay production over the same time period.
“We can point to the drought year of 2012 as an outlier, but since that timeframe, we’ve seen a lot of stability in our hay production,” he commented. “We have adequate supplies from a U.S. standpoint.”
While several regions of the country have seen drought and tight supplies for hay, Murphy said, overall, the country is in good shape.
“As we transition to El Niño in the second half of 2018, we’ll be well-equipped to have a solid production year for the hay crop,” he emphasized. “Don’t look for significant changes in terms of supply or price as we look to 2018, especially in the second half of the year.”
Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to saige@wylr.net.
