With the California drought decimating rangeland and historically low water deliveries that are expected to reduce production of key feed crops in the state, the latest USDA estimates are "not the best of news," said Joel Karlin, commodity manager and market analyst for Western Milling in Goshen.
noted that livestock producers are already paying very high prices for hay and silage, and the price of corn and soybean meal has been on an upswing since the start of the year.
Despite the lowest U.S. cattle herd since 1951 and the deadly porcine epidemic diarrhea virus that has trimmed the nation's hog population, corn usage has been high throughout the country, Karlin
"Certainly nothing in USDA's report would suggest that the uptrend (in feed prices) would not continue," he
Coming off of record-high prices in 2012, corn is now one of the cheapest feed ingredients for livestock, and lower prices generate strong worldwide demand, Karlin
While prices probably won't return to the high range of $8 a bushel, he
said, they could stay at elevated levels of $5 to $5.50 a bushel until the market has a better sense of what the 2014 crop will be.
A good growing season could ease prices back to $4.25 to $4.50 a bushel, he
said there is also debate among California wheat growers about how much recent rains have helped their crop.
USDA projected the state's planted wheat acreage to be down 15 percent from 685,000 last year.
If growers get additional rains during the next month or so, some may consider letting their crop grow to grain rather than cutting it for hay or silage, Karlin
said one factor that may be contributing to slightly higher hay acreage in the state is the improving financial standing of dairy farmers, as the rebounding dairy market has raised milk prices and producers' profit levels.
"That may have emboldened some producers to plant hay, confident that they'd be able to get paid," he
The price of soybean meal, another important feed for dairies, probably will not weaken much from current historic highs until the second half of the year, Karlin
said, despite USDA projections of record-high soybean plantings.