CATTLE MARKET PREDICTED TO CONTINUE STEADY PACE

COLLEGE STATION — Strong beef demand, cheap grain and a small calf crop will continue to be the keys to the current rise in the beef market, with predictions that high prices will continue on into 2001.

“Calf prices will stay strong because we’ve got a small calf crop and we haven’t been saving any heifers to rebuild calf crops,” said Dr. Ernie Davis, a beef economist with the Texas Agricultural Extension Service. “Prices for 2000 on into 2001 should remain strong.”

The U.S. Department of Agriculture projects in its latest livestock outlook report that feeder cattle prices will likely remain in the mid-$80s per hundred weight for much of the year, though prices will be increasingly sensitive to forage and crop developments this spring. Continued strong demand for beef and declining feeder cattle supplies will support prices.

Rising feeder cattle prices and break-even prices on fed cattle to be marketed through early summer will hold down feeder price increases until fall, according to the report. Fed cattle prices are projected to average $67 to $68 per cwt this winter with heavy weights and large slaughter potential placing cattle feeders in a weaker bargaining position. The report indicates a strong economy and continued high consumer confidence helping to support beef prices, particularly higher quality beef at the hotel-restaurant market.

Fed cattle prices are likely to move into the low $70s this fall as the impact of reduced feedlot replacements beginning in late winter begin to verify the impact of four years of declining inventories.

Curtis Burlin, owner of the Navasota Livestock Auction Co., said it “all hinges on farming and having a good corn crop. The secret to the whole thing has been cheap feed.” The USDA report indicates that grain stocks remain large, with the farm price of corn expected to range from $1.75 to $2.05 a bushel unchanged from $1.94 a bushel during 1998 and 1999. The price for corn per bushel was $2.43 during 1997 and 1998.

While corn and other commodities continue a price decrease, a steady increase in cattle prices is welcomed relief to many ranchers who have had to battle drought four out of the past five years.

“We’re looking at the best cattle market we’ve seen in 20 years,” Burlin said. “If we can get these calves sold for what we’re getting now, it will sure help out a lot. I sold 27 calves here Saturday that averaged $511 a head net. It’s a pleasure to hand a man a check now and he looks back and smiles. In years past, you could almost see tears coming out of their eyes.”

Retail prices for Choice beef averaged $2.88 a pound in 1999 up 11 cents from a year earlier and the strongest since 1993 when it reached $2.93. Prices peaked in December at $3.02 a pound as the purchases for New Year’s events appeared to peak.

The report projects that prices will likely return to a more typical supply-demand trend established in 1999 and average nearly $3 a pound in 2000. Prices for Choice beef at the retail level declined to $2.95 in January, but are likely to remain at the $2.90 mark until fall when they are predicted to rise above $3 a pound, the USDA reports.

Dr. Larry Boleman, a beef cattle specialist with the Texas Agricultural Extension Service, said ranchers should enjoy the high prices, but should not be lax in management practices.

“What happens is occasionally when you get a windfall of money, or more than you expect, you tend to be less fruitful,” Boleman said. “They always say when times are bad, tighten your belt to get through it. When times are good, take some of that money and repair some things, buy some pieces of equipment. Don’t go wild with it, or get something you don’t need. Use some of that extra money on some things that need to be done like repairs or purchase something that is needed. Be diligent. Be wise.”

Producers now are praying for more rain so that pastures will produce needed forage to maintain herds.

“There’s been quite a few rains over the bigger parts of the state taking some pressure off temporarily,” Davis said. “But we’re still not out of the woods yet. We’ve gotten some January and February rains, but it doesn’t continue to rain, we’ll be right back like we were during the droughts of 1996 and 1998.”

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