August 21, 2003

 

Market Advisor: Experts Predict Higher Annual Livestock Prices

By Tim Petry, Livestock Marketing Economist
NDSU Extension Service

Every year in mid summer, livestock marketing economists who do market analysis are surveyed to forecast their projections for meat production and livestock prices for the upcoming year. Ron Plain, Extension Economist at the University of Missouri, conducts the survey and tabulates the responses.

The results are revealed at the annual meeting of the American Agricultural Economics Association. This year’s meetings were held July 27-30.

The group expects beef production to decline 1.2 percent in 2003, with another 0.6 percent decline in 2004. The lowest individual prediction for beef production in 2003 was a decline of 3 percent, and the high prediction was for production to increase slightly by 0.2 percent.

Prices are expected to respond favorably to the decline in production. The group predicted 1,100-to 1,300-pound USDA Choice slaughter steers in Nebraska to average $76.75 per hundredweight in 2003, up almost $10 from $67.04 in 2002. A further increase to an average of $78.03 per hundredweight was predicted for 2004.

Quarterly predictions for Choice steers were $74.59 and $76.27 for the third and fourth quarters of 2003. For 2004, quarterly predictions were $78.38, $79.74, $76.02, and $77.47 respectively.

USDA medium frame no. 1, 750-800 lb, feeder steers at Oklahoma City were predicted to average $83 per hundredweight in 2003, up from $80.04 in 2002. A further increase to $85.03 in 2004 was expected. Quarterly predictions for the third and fourth quarters of 2003 were $85.49 and $85.16, respectively. Estimates for the four quarters in 2004 were $83.33, $85.38, $85.69 and $85.41.

The highest individual annual estimate for 2004 was $89.50, and the lowest prediction was $77.25.

The group does not forecast prices for lighter-weight feeder calves. However, feeder calves also should be stronger in the next year.

The U.S. cow herd has declined for seven straight years because of drought in much of the Western cattle-producing area. This will cause a tight supply of feeder calves this fall and, along with a record corn crop currently predicted by USDA, should boost feeder calf prices over last year’s levels.

A rule of thumb for feeder calf prices, for the fall of 2003, is that the same weight and market class of calves sold at the same time in 2003 as 2002, should average $8 to $10 per hundredweight higher.

A word of caution is that although a record corn crop is predicted, the Western Corn Belt is currently suffering with dry conditions. If dry conditions continue, and corn prices increase, feeder cattle prices will suffer. The group’s average forecast for the U.S. farm price of corn was $2.12 per bushel for the marketing year beginning on Sept. 1, down $0.18 from the $2.30 per bushel for the current year.

Survey respondents expect the live price of 51-52 percent lean barrows and gilts in Iowa/Southern Minnesota to average $42.01 per hundredweight during this quarter and $38.83 during the fourth quarter of 2003. The group estimated the 2003 annual average at $39.60, which would be $4.69 higher than last year.

Market hog prices are expected to continue to increase in 2004 with an annual average of $42.27.

Lamb prices are also expected to be higher than last year. Lamb and mutton production for the first half of 2003 was down nearly 12 percent from last year. Lamb imports were also down about 9 percent due to drought conditions in Australia, the major supplier of lamb to the United States.

The experts predicted USDA Choice slaughter lambs in San Angelo, Texas to average $91.17 per hundredweight in 2003, up almost $19 from 2002. A slight decline to $90.43 was predicted for 2004. If drought subsides in Australia and imports from there increase in 2004, lamb meat imports will account for about 50 percent of U.S. consumption.

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Source: Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsu.nodak.edu