Six-and-a-half dollar corn could be just around the corner according to the editor of Cattle Buyers Weekly.
Many analysts are expecting the USDA to further reduce corn production numbers in this morning's report.
"Lo and behold, they may say yields were even smaller than we thought. Therefore the crop may only be 12.5 billion bushels. That means December corn could go to 6.35 a bushel, maybe 6.40. We could have 6.50 corn pretty quickly," says Steve Kay, editor of Cattle Buyers Weekly.
He says Canadian cattle producers have an edge as barley prices have not risen to the same extent as corn. "Higher corn prices put more pressure on U.S. cattle feeders in particular. The bottom line is because of your barley prices, it puts western Canada at an even more competitive feeding advantage," he says.
"Corn is always a critical factor when looking at the outlook for cattle producers," Kay says. "Canada's advantage may grow even greater because the USDA shocked the markets in October with the lower than expected yield in their crop forecast, then we had the Environmental Protection Agency expanding the allowable percentage of ethanol in fuel from 10 to 15 percent. So it was a double whammy or double hit on corn prices in a sense. And now, the USDA is likely to come out with a report that says yields are even smaller than we thought."
~ Tuesday, November 9, 2010 ~