Corn stocks as a percentage of use in 2010-11 are expected to be the lowest since 1994-95, the USDA said.
Friday’s USDA reports “opens plenty of opportunities to tighten that further,” said analyst Terry Roggensack, who also spoke at the CME press briefing.
Beef and pork producers can still make money as corn rallies if animal prices remain high, said Roggensack, who’s a founder of The Hightower Report, a Chicago-based advisor. He doesn’t expect a reduction in livestock numbers in coming months.
“Livestock feeders could handle it if cattle and hog prices continue to rise,” Roggensack said. “It would take a serious double-dip recession to knock down livestock numbers further.”
“The cost of producing livestock is going up and the livestock producer needs to be rewarded with higher prices,” Roggensack added. “It’s going to cost more to do business.”
Milk price forecasts
Milk prices are expected to be higher than previously forecast, partly reflecting stronger exports, the USDA said.
Class III milk, used to make cheese, is expected to average $14.50 to $14.70 per hundredweight in 2010, the USDA said. That’s up from a previous estimate of $14.15 to $14.35. In 2011, the USDA projects average prices of $14.40 to $15.40.
“Strong demand for cheese and tight supplies of butter support higher forecast prices for 2010 and 2011,” the USDA said. “Stronger demand is forecast to absorb most of the increased production, although prices are expected to be tempered during the latter part of 2011.”