Allen Bentley, Genesus Inc.
That is a large step and the only way we will get rid of that much more meat is overseas. Everything is in place and we will watch the next few months to see how well we ramped up production to match extra slaughter capacity.
What is a little clearer; is feed cost. We have corn and bean prices at levels that will help out producer’s break evens. I really see no reason to lock in any of these prices. There should be 2 billion bushel of corn left over from last year and this is looking to be another year of high yields for crops. Corn prices are not heading higher anytime soon. It will take a pretty major weather event next summer to push corn prices higher.
If we see some minor weather issues next year, I don’t see corn prices getting too out of hand with the amount of carry-over we have. Basis always needs to be addressed separately from the CME price. Watch for some opportunity to lock in these wider basis levels.
I visit with people who study charts more than I do. The repeated CME corn price I keep hearing is $3.17. If we get to that number and if the basis is favorable to lock in some $2.60 corn, then I would lock in some feed needs.
Overall it looks like our feed costs are going to be better than they have been the last few years and should help keep us in the black.
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