Professor predicts break-even cattle prices

Professor predicts break-even cattle prices Market observers are talking $70 fed cattle in 1999, but with the conditions expected that level might be a little difficult to attain.

Gene Murra, professor emeritus economics department, South Dakota State University, said low corn prices, now and expected late in 1999, may help support feeder cattle prices but likely will cause feeding to heavier weights and therefore, price pressure.

Murra's educated guesses for 1999 market prices based on current and expected conditions are: fed steers in the mid-$60 range; 700-800 pound steers in the mid-$70s; and 500-600 pound steers in the mid-$80s.

"If the above prices are realized, they should be break-even or better for efficient producers," he said. "However, the prices are not high enough to create a lot of excitement for most producers."

Feeder cattle prices are related to three major factors: 1) expected fed cattle prices; 2) the supply of feeder cattle; and 3) corn prices.

Low feeder cattle prices took their toll on many S.D. beef producers in 1998.

"In 1998 it appears that the negative impact from low fed cattle prices more than offset a small positive impact from slightly lower feeder cattle numbers and a big positive impact from sharply lower corn prices," Murra said.

Regardless of the weight category evaluated, in 1998 feeder cattle prices were higher in the first half of 1998 than in the second half.

Murra added that prices for the 700-800 pound medium framed number one feeder steers moved from the mid-$70s early in the year to the $65-70 range in the latter part of the year. Prices for similar quality 500-600 pound steers dropped from the $90 area to the $70-75 range.

Murra saw several reasons for the lackluster price performance in 1998. One of these is the supply of beef.

"While slaughter numbers were below 1997 levels, average slaughter weights were 30 pounds or more above 1997 and the 1992-96 average. The net result was more beef produced," he said.

The export market, is another reason why cattle prices were at a low. While above the 1992-96 average and close to the 1997 level, exports were not enough to boost cattle prices.

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