Trend-watcher/forecaster sees cattle topping out at $160, falling to $120

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The weakening of Brazil’s currency and a predicted drop in Japan’s population in coming decades are factors that are directly affecting the U.S. cattle market, Ag Resource Company President Dan Basse said recently in speeches at the  Feeding Quality Forum in La Vista, Nebraska, and Garden City, Kansas.

Basse said fed cattle prices soon will top out near $160 before dropping to $120 or lower. Basse also predicted that as long as normal weather patterns hold, $3-per-bushel corn prices will be the norm until 2019.

U.S. grain producers need to concentrate on making margin, Basse said. Despite being down 9 percent, U.S. gross farm income is going to be the fourth largest on record this year, but net farm income will see the biggest drop since 1932, Basse said.

The strength of the U.S. dollar reflects on exports. For example, large wheat exporters such as Argentina, Russia and Brazil have seen poor currency exchange compared with the U.S. dollar in recent years.

"Somebody in the world, from our work, has to cut 15 to 20 million acres of (wheat) production to balance the world out," Basse said.

If corn prices are trending lower to discourage production, then it makes sense that cattle prices are doing the opposite, Basse said. “Cow-calf producers have seen record profits as of late. The second phase is when the feedlot does much better than he's done and that should come to play somewhere, but we have to have the availability of feeders before that can really get to that point," Basse said.

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Ag Resource Company 200 W Jackson Blvd Chicago, IL - 60606

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