October 14, 2010

Rising corn futures push cattle prices

Corn prices are up 19% in the last four trading days, boosting the crop's value by billions of dollars, but pushing up meat prices.

Corn futures for December delivery closed Tuesday (Oct 12) at US$5.79 a bushel, up US$0.2325 from Monday (Oct 11) and US$0.905 from last Wednesday (Oct 13). As recently as mid-June, corn traded around US$3.60 a bushel.

Prices have risen as farmers report decreased yields because of moisture damage to corn plants. The exact gain to farmers is unclear, depending on how much of their crop has been presold for forward or futures contracts and at what prices.

But hog and cattle producers now are faced with higher feed costs just as they emerge from a three-year period of losses caused by the first wave of corn price increases that began in 2007.

Though cattle prices are up 20% this year and hog prices up 50%, costs at the supermarket have risen modestly over the past year.

USDA surveys show hamburger prices up 17%, choice round roast prices up 5% and choice steak prices actually down slightly from August 2009 to August of this year. On the pork side, bacon prices are up 21% from a year earlier. Ribs are up 19% at the end of the summer grilling season, but boneless hams are up just 1.5% as the holiday season approaches.