Beefenomics: Corn-Feeder Cattle Price Connection

By William Secor

The ups and downs of summer weather are upon us affecting a host of agricultural markets. The focus of this note is looking at how feed costs can affect cattle markets, specifically corn prices. In general, if growing conditions are worse than expected (e.g., a drought), corn prices increase because markets anticipate a smaller than expected crop. In contrast, if growing conditions are better than expected (e.g., ideal weather), corn prices will fall because markets anticipate a larger than expected crop.