While higher commodity prices are generally well-received in agriculture, livestock producers grow concerned when row crop prices grow too high. As Tuesday’s corn prices rose to $6/bushel, DTN Livestock Analyst ShayLe Stewart says that price tag is a mixed bag for cattle producers. The onset of higher corn prices influences feedlots to market cattle at lighter weights. This means that come the end of the month when the Cattle Inventory report is released, its likely going to show a substantial decline in beef cow numbers, further boosting demand. High corn prices can be compensated with a strong beef market. Additionally, high corn prices can be better stomached if cattle contracts rally with them.
Historically, cattle contracts trade in an inverse manner to the corn market and feeders are heavily influenced by what the corn market is doing.
Read more on cattle and corn markets going in to 2022.