Drought that is spreading across the country is increasing feed prices and quickly spelling financial disaster for livestock producers.
Purdue Extension Agricultural Economist Chris Hurt says while crop producers face serious economic losses from reduced or non-existent yields, the lack of corn, soybean and hay crops could make the fallout even worse for milk, beef, pork, chicken, egg, turkey and duck producers.
Hurt says December 2012 corn futures already have risen by nearly 55 percent, and soybean meal futures are up 24 percent.
He says higher feed prices have to be absorbed by the animal industry, causing a collapse in financial margins.
Hurt says the lack of profitability is likely to cause some livestock producers to begin liquidation immediately, with possibly even more liquidation in the fall.
He says increased slaughter in summer and fall will lead to a larger supply of animals, especially beef cattle, on the market, which he says is likely to push some livestock prices modestly lower, further narrowing any remaining profit margins.
Hurt says, unfortunately, the profit prospects for many in the animal industries will not improve markedly until feed and forage prices can move lower with more normal crops in 2013.
He says it's important for livestock producers to help make clear to consumers and policymakers the sort of extreme financial stresses they will face in the coming months.