By Dr. Andrew Griffith
A question was asked last week how increasing corn and soybean prices will impact feeder cattle prices this year and in future years. In the short-run, higher feed prices will put pressure on feeder cattle prices, because it will be more expensive to feed them. However, this particular question was about pasture and hay acres potentially shifting into corn and soybean acres which would reduce the number of cattle over the next few years.
There is no doubt that some acreage could be shifted to row crop production, but it may take the form of intensifying land usage as opposed to a complete shift. Cattle production tends to work off a longer planning horizon than crop production so a price increase in grains and oilseeds does not mean a cattle producer should immediately change the course of action and shift land usage.
There is really no good way to answer the exact question that was asked, because there is no way to guess what land owners will do with land. The expectation is for stronger feeder cattle prices the next two to three years.
Source : osu.edu