Crystal Ball

<a href="http://www.cattlenetwork.com/content.asp?contentid=59627" title="Crystal Ball Forecasting">Cattle Outlook: 2007 Similar Or A Little Lower Than 2006</a><br />n<br />n<blockquote>The American Agricultural Economics Association (AAEA) annual outlook survey for the remainder of the year and 2007 for livestock and the marketing year of 2006-2007 for crops shows the Nebraska price for the year of 2006 at $83.20 and for 2007 at $81.82 per cwt for fed cattle.<br />n<br />nThe average estimate for 750-800 pound feeder cattle, Oklahoma City basis, is for an average of $106.05 per cwt for 2006 and $102.34 per cwt for 2007. </blockquote><br />n<br />nThe fortune tellers are at it again. Telling us what future cattle prices are going to be. It makes for interesting reading but if it actually comes to fruition will be more interesting. I see two things in the forecast that make me wonder.<br />n<br />nI really wonder about their forecast of corn prices. The pressure the ethanol plants are putting on corn markets is tremendous. Is their estimate high enough or will corn prices be higher than they guess? I don't know but for every little bit corn prices move up, livestock prices tends to go down so I guess we will see.<br />n<br />nThe second thing is how the Japanese market will affect demand for beef. The story I <a href="http://nowherethoughts.net/sarpysam/archives/1963-Interesting-News.html" >talked about yesterday</a> is a small indication that demand might be higher than we earlier thought for US beef in Japan and any increase in demand for US beef will drive prices up.<br />n<br />nWith these two thoughts in mind, what is the future cattle prices going to be? Only the future knows. Planning for the price to be a little lower though makes it nice since if they stay the same or go up you have a pleasant surprise and if prices do drift down you planned on it and are prepared for it. <br />n<br />n<strong>He who lives by the crystal ball soon learns to eat ground glass. Edgar R. Fiedler</strong>