Trends . . . FED CATTLE SITUATION AND PRICE OUTLOOK
source: Weekly Livestock Monitor, Western Livestock Market Information Center, Denver, 21 Sep 04
Many factors are influencing fed cattle prices. What is most clear is that this Fall quarter will not be a repeat of 2003. In late 2003, slaughter steer prices skyrocketed to new all time highs. This Fall, fed cattle prices are expected to struggle to get any higher. But, calf and yearling prices may be under some modest pressure that may build as the quarter progresses.
Cattle slaughter has been small in recent months, but cattle weights have been increasing dramatically. Imports of beef by the U.S. have been much larger than forecast, especially in June and July. Supplies of competing meats and poultry in the domestic market are large and are likely building up. U.S. consumer beef demand appears to remain strong and may still be posting year-to-year increases, but those increases are likely to be well below the gains posted in recent quarters. Cyclically, U.S. cattle numbers are near the low points of this cattle cycle and may not build-up very fast. Of course, there are many unknowns about how and when markets will return to more normal international trade patterns for beef exports and U.S. cattle imports from Canada.
For the third quarter of 2004, fed cattle prices are projected to average about 3 percent above a year ago. Even larger year-to-year gains were posted for yearlings and calves. During the third quarter of 2004, in the Southern Plains 700-to 800-pound steers and 500-to 600-pound steer calves posted gains of 20 percent compared to 2003's.
Forecasts for the fourth quarter of 2004 are for fed cattle prices to average 9 to 10 percent below 2003's record high. Still, that means slaughter steer prices will likely average in the $85 to $87 per cwt. range. For the last quarter of 2004, yearling steers (700-to 800-pounds) are expected to average in the $107 to $110 per cwt. range in the Southern Plains, or $6.00 to $10.00 per cwt. below the record quarterly average recorded in the third quarter of 2003. In turn, calf prices this fall will likely be seasonally lower from the Summer quarter levels for most areas of the U.S. Still, steer calves (500-to 600-pounds) in the Southern Plains may average near $115.00 per cwt. this Fall, the highest fourth quarter average on record.
Looking ahead to 2005, cattle prices are forecast to post year-to-year increases for the first half of the year. However, prices will likely remain below the lofty levels of this past summer. Still, by historical standards cattle prices will be strong. For the year, fed cattle prices in 2005 may average about 4 percent above 2004's. Yearling cattle may decline some from 2004's price levels, but calf prices for the calendar year might decline only very modestly and remain well over $100.00 per cwt. for 500-to 600-pound steer calves. Those price levels should support some of the highest breeding stock prices ever in 2005, assuming normal forage production and feed grain prices.
posted by Dr. Harlan Hughes 8:52 PM