Livestock economist says risk management crucial as market volatility continues

A livestock economist is urging cattle producers to take a hard look at risk management strategies as dry weather fuels more volatile corn and soybean markets.

University of Missouri’s Scott Brown says the weather in Iowa, Illinois, and Indiana this summer will matter.  “In terms of where prices go,” he says.  “But if we get rain in those states, I think we know the direction of prices for corn and soybeans — that will be lower. If we continue not to get rain in some of those places and we get drier and drier, we know that’s going to affect the yields to the negative and we likely get higher prices.”

He tells Brownfield the means better understanding production costs. “How can you protect what you don’t know,” he asks.  “It’s back to knowing your production cost. You know whether that’s a profitable opportunity to lock in risk given those relative prices.”

And with the volatility in the markets (corn, soybeans, and cattle), Brown says knowing break-even costs help producers utilize the right tools to manage their operations.

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