Submitted by SDSU College of Agricultural and Biological Sciences
Although many areas in South Dakota are still suffering from the effects of last year's drought and are in need of more rain, overall conditions are much better than last year and that has impacted the markets, said Darrell R. Mark, Adjunct Professor of Economics South Dakota State University.
"What a difference a year makes! This time last year corn was being harvested for grain in southeastern South Dakota amid a heightened level of fire risk and silage had been cut in early August. Cow herds were taken off scorched pastures, calves were weaned early, and cows were being fed any alternative feedstuff available," Mark said. "Whereas, this fall's corn crop won't be harvested early, leaving some to worry about the impact of an early frost. Cattle are still on pastures in eastern South Dakota in early September."
As producers gear up for a busy fall season harvesting corn and soybeans, weaning calves and working cow herds, Mark shares some notes on how the change in conditions during the 2013 growing season have impacted markets as well as the overall industry climate: New crop corn prices are $2.50-3.50 per bushel lower than last year due to much better crop condition ratings, which will likely lead to a national yield in the 153 to 155 bushel per acre range compared to last year's 123.4 bushel per acre national yield. New crop soybean prices are about $4 per bushel lower than at this time last year, again due to much better crop production prospects.
In South Dakota, more than twice as much of this year's crop is rated good to excellent compared to last year. Pasture and range conditions are dramatically improved in South Dakota compared to last year. Nationally, pasture and range conditions are moderately improved, with the western U.S. still experiencing drought.
Although alfalfa and other hay production have improved this summer, tight stocks at the beginning of summer and challenges putting up quality hay this summer have supported hay prices. Generally, the bottom of the price range has softened compared to last year, but the best quality hay can still bring as much as it did last year at this time.
Distillers grain prices and soybean meal prices are lower than a year ago, reflecting the lower corn and soybean prices. Lower corn prices and tight feeder cattle supplies have resulted in feeder cattle prices averaging about $20 per hundred weight higher than a year ago. Slaughter cattle prices have languished in the low $120s for much of the year, and currently are on par with year-ago prices. Expected reductions in slaughter numbers in the months to come should support fed cattle prices and help push prices closer to $130 per hundred weight by the end of the year.
Based on current conditions, Mark said many growers have many marketing decisions to make.
"They are wondering, should I store my corn crop this year; should I store my soybeans this year; should I retain ownership of my calves this fall and background or finish them; should I retain more heifers or buy bred cows to increase the size of my cow herd," said Mark.
He cautioned that the answers to these questions are not the same for everyone because cost of production and risk tolerance differs amongst producers. He added that all producers need to evaluate the unique opportunities available to them, keeping in mind that this year is very different than last year.
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