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Livestock developer: 2013 is ripe for livestock sector profit
 
By TIM ALEXANDER
Illinois Correspondent

PEORIA, Ill. — Pork, beef and even dairy producers could be poised for a profitable year if planting intentions for more corn materialize and feed prices continue to drop, according to livestock business developer Nic Anderson, of the Illinois Livestock Development Group.

During the Illinois Pork Expo in Peoria on Feb. 5, Anderson said livestock numbers in Illinois are increasing because of the state’s proximity to feed sources, packing plants and multi-modal transportation options, giving them a cost advantage over farmers and ranchers in other traditional cattle-producing states.

“There have been supply changes on the beef side, with a packing plant closing in Texas that will really impact that area greatly. A lot of cattle have moved back to the Midwest and Illinois has seen increases. Better transportation, packing plant access and feed access has increased stability by attracting more cattle,” said Anderson. “We’re also seeing that on the pork side.”

A return to $4 corn – a favorite topic of speculation on ag websites and online chat rooms recently – could result in a banner year for profitability across “each sector – beef, dairy and pork,” Anderson continued.

“To get to $4 corn, we’re going to have to have a pretty good Brazilian corn crop. But if we go over our (domestic) trend yield we could see it. Weather will certainly affect (prices) as well.”

A robust export market for pork should continue to bolster producer profits, said Anderson, adding the results of the Brazilian crop harvest will help determine whether more growth could occur in Illinois. “It will determine if we keep moving or pull in our wings a little bit. That’s all kind of unknown right now,” he said.

“If we get some moisture here and get a crop in, we’ll get a little sigh of relief. Right now we’re in a really good position, and as long as corn and soybeans get planted and we have input costs we can control, some good things could happen on the pork side.
“The dairy side is a little tougher. We’ve seen a reduction in Class 3 milk prices, but the great thing about Illinois is we are deficit of milk, so we automatically get a milk transportation premium. If the milk price continues to drop and dwindle, the fringes of the dairy industry are going to get hurt first due to costs of production. We’d like better dairy prices and they may come back, but we can still be competitive here in the Midwest,” he said.

Because of Illinois’ proximity to homegrown feedstuffs, the state’s pork producers should not feel the brunt of the lingering effects of the 2012 drought, as might producers from other states and regions, according to Anderson.

“We’ve stabilized (prices) and now we know where inventory is, where usage is. I think we have most impacts under control, even though we know we’re going to pay more for costs of production at times. But if we can keep things moving on the pork side, I don’t see that impact being there,” he said.

“We’ve got an ethanol industry here that produces high-quality feedstuff you can mix with meal that other states and fringe markets don’t have access to. We’re much more comfortable here than we would be in Hereford, Texas, right now due to transportation and feed costs.”

Illinois livestock producers are on a record yearly pace for construction of new facilities or expansion of existing operations, Anderson noted.

“The way we judge growth in this state is through notices of intent to construct through the Illinois Department of Agriculture,” he said.
“We are on a 150-notice pace this year. That’s almost as good as our best year, so that tells us that people are reacting to the market and they are going to invest back into new infrastructure.”
Newly released figures by the USDA National Agricultural Statistics Service (NASS) seem to support Anderson’s assertion more livestock are being relocated to the Prairie State. According to NASS’ Feb. 4 Illinois Farm Report, the total number of cattle and calves in Illinois on Jan. 1 was 1.12 million head, 50,000 above last year’s total. The figure represents the first increase in any Jan. 1 cattle inventory since 2007.

Beef cows and steers played the largest role in the increase, up 29,000 and 30,000, respectively, the report stated.
2/13/2013