Market volatility continues, economist says risk management remains vital

An economist says livestock producers will continue to face some serious headwinds when it comes to feed costs.  University of Missouri’s Scott Brown says, “The focus should be on when producers can lock some reasonable profitability and take some risk off the table.”

He tells Brownfield producers will likely have to take a more hands-on approach to risk management. “We’re still going to find days where markets move lower for corn and soybeans and days where markets move higher,” he says.  “Taking advantage of those times when markets are down might be helpful.

He tells Brownfield he doesn’t expect the volatility in the grain markets to subside anytime soon.  He says that is especially concerning for pork producers.  “Especially those trying to find ways to get any black ink if possible,” he says.  “In these markets, that’s tough to do. But if we get close to that, getting that risk of higher feed costs or lower hog prices out of the equation may be the long-term best strategy.”

Brown says the current run-up in soybean prices could spur an increase in soybeans planted in Brazil – but that remains to be seen and wouldn’t provide any relief anytime soon.

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