Cattle and Dairy: Lock in Feed Inventory, Prices Now

A semi dumping wet distillers grain at a feedlot. ( Wyatt Bechtel )

Corn and soybean producers aren’t the only ones feeling the squeeze of wet weather. Cattle and dairy producers are left wondering what this means for their access to feed, and how soon they should lock in inventory.

“’Normal’ production has been hard to find in recent years,” says Mike North, with Commodity Risk Management Group. “At the end of the day you need to make sure you have the corn supply you need at your disposal to carry you through next summer.”

There are three things cattle and dairy producers should be doing now, in this order, he says.

  1. Take in physical inventory—you can’t feed cows contracts and you don’t know what corn will be available.
  2. Lock in prices—they could keep going up, lock in prices through fall 2020.
  3. Give yourself some price protection—work with a broker on puts, calls and options just in case the price does go down.

“Higher corn prices will drive a lot of acres into corn next year, so we could see corn back in a robust scenario,” North says. “Still, protect corn until next fall.”

 
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