Status of Wisconsin Agriculture 2010 - Agricultural & Applied ...

The main pressures on the supply
side were a substantial three-year
increase in the cost of feed, particularly
corn, as well as persistent
droughts in the western United
States. The rise in corn prices coincided
with the rapid increase of use
of corn to make ethanol.
U.S. average corn prices broke the
$3-per-bushel barrier in November
2006. They have averaged $3.97 per
bushel since then, hitting an all-time
high of $6.56 in June 2008. From
November 2003 through October
2006, U.S. corn prices averaged
$2.16 per bushel. From then to the
end of September 2009, they averaged
$3.77.
The size of the U.S. corn crop actually
increased 8 percent, from an
average of 11,003 million bushels
for 2003-2005 to 11,891 million
bushels for 2006-2008. But despite
the larger crops, the amount of corn
used for domestic feed declined 7
percent, from 6 billion bushels in
2003-2005 to 5.6 million bushels in
2006-2008.
Although livestock producers’ costs
increased from 2008 to 2009 and
U.S. meat production was down 3
percent, average prices of choice
cattle, feeder cattle, cows, hogs,
broilers and turkey all declined.
About the only bright spot for producers
was that hay prices were
below the 2008 record highs.
Cow slaughter changed only slightly
in 2009 on the heels of a vigorous
three-year rise (from the smallest
slaughter in 42 years in 2006). Dairy
cow slaughter was up about 12 percent
due to three rounds of the CWT
herd retirement program. Slaughter
of beef and other cows was down
about 9 percent. Cow slaughter in
2009 remained about 41 percent
below the record high recorded in
1975, but about 20 percent above
the recent low of 2005.
2010 Forecast.
Following the 3 percent decline in
U.S. meat production in 2009, a
smaller drop of about 1 percent is
expected in 2010. A small increase
may be experienced in poultry production
against a modest decline in
pork and beef.
A wild card in the outlook in 2010 is
the quality of the 2009 corn crop.
The crop was planted late because
of a cold and wet spring. Summer
was marked by favorable precipitation
but fewer than normal growing
degree-days, and a wet and cold
October delayed harvest. The harvested
corn appears to have an
above-normal moisture content.
When a similar situation occurred
with the 1972 crop, some animals
failed to eat and gain weight in a
normal fashion the following year.
Pork production unexpectedly fell
more than 9 percent in 1973. Drying
and storage technology is far
advanced from what it was 37
yearsago, but the industry should be
alert to any problems.
U.S. Corn Production and Use, September, 2003–August,2009
2003-2006 2006-2009 Change
Mil. Bu. Mil. Bu. Mil. Bu. Percent
Corn Production 11,003 11,891 888 8
Feed Usage 6,033 5,586 (447) (7)
Export 1,954 2,140 186 10
Ethanal Usage. 1,365 2,948 1,583 116
Food, Indus., Seed 1,370 1,328 (42) (3)
World Agricultural Supply and Demand Estimates, USDA, various issues
Choice Cattle Prices May Increase
a Little. Choice cattle prices had
averaged more than $90.00 per hundredweight
in 2007 and 2008, but in
2009 a severe U.S. recession with
substantial unemployment cut
demand, causing prices to tumble
about 10 percent.
Domestic beef demand should be
stable to slightly higher in 2010.
Exports will likely increase as the
world economy recovers, and this
will also support the continued
increase in byproduct value. These
factors, combined with lower production,
should allow a slight
increase in fat cattle prices relative
to 2009.
Feeder Cattle Prices Likely to
Improve Modestly. After a five–year
run of prices exceeding $100 per
hundredweight. (Oklahoma City),
feeder cattle prices declined about 6
percent in 2009. A higher price for
fat cattle and smaller calf crop will
support higher feeder cattle prices in
2010. Additionally, lower feed costs
have a positive impact on feeder cattle
price. Prices should work back
up toward the $100 mark in 2010.
As always, the price of feed and the
price of finished cattle will be the
main determinants.
Utility Cow Prices Expected to be a
Little Higher. Utility cow prices
(Sioux Falls) jumped 39 percent from
2002 to 2005 to $54.36 per hundredweight,
but since then they have
trended irregularly but lower to the
upper $40s. A modest 5–10 percent
improvement is anticipated in 2010.
Federally Inspected cow slaughter
fell 54 percent from a record-high
10.4 million in 1975 to a 42-year
low of 4.8 million in 2005. Slaughter
has since recovered to about 6.1
million in 2008 and 2009. Little
change in cow slaughter is expected
in 2010. If employment rises in
2010, some modest price increase
can be expected.
In 2009, dairy cow slaughter totaled
about 2.9 million head, up about 12
STATUS OF WISCONSIN AGRICULTURE 2010—CURRENT OUTLOOK: LIVESTOCK AND POULTRY 23