From the November 01, 2012 issue of Futures Magazine • Subscribe!

Grains outlook: After the big drought

Because corn is crucial to raising livestock, including poultry, hogs and cattle, feeding margins will be lowered sharply by the higher prices and animal numbers will be cut. “We probably have too much killing capacity for the number of cattle that we’re going to have,” Crouch says. “I tell my city friends a year from now when you order a steak, you’ll think you’re eating lobster. It’s going to be high priced. We’re going to have reasonably priced meat here for another 90 to120 days as we liquidate some of this breeding stock and put the extra meat on the market (see “Eat more chicken,” below). But once that is done, protein in this country is going to be very, very high.”

J. Richard Crow, president, owner and principal of Crow Trading Inc., says the grain and livestock market outlooks will be contingent on supply and demand calculations, crop reports and stock reports. “Stock reports are hard to measure and this is an extremely tough one to measure,” he says. “You’re not going to know the feeding deal until you get to the January report and maybe clear out into the March report. So the market’s going to be off-base on feeding and residual all year, or has the chance to be off-base all year.”

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