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"Returns for brood cow operations remain strong and are causing
additional interest in heifer retention," said Chris Hurt.
"Potential for opening the world's markets to U.S. beef appears
more likely than at any time since late 2003. Cheap corn and
soybean meal, especially in the western Corn Belt, are making
cattle feeding and heavier weights an added attraction."
Hurt's comments came as he reviewed the cattle market, which has
outperformed expectations this fall. Prices for choice finished
steers dropped to the high $70s in July and August as Canadian
live cattle were allowed to move south.
"There was a general concern that these added supplies would
result in weak fall prices," he said. "That has not occurred, as
cattle prices have moved to the higher $80s, and futures markets
remain optimistic that prices will push into the low $90s this
winter."
So far this year, finished steer prices have averaged near
$86 -- about $1.50 higher than for the same period last year.
Prices for 500- to 550-pound steers on the Plains have averaged
a record $1.32 per pound, compared to $1.21 per pound during the
same period last year.
"While finished cattle prices are about 2 percent higher than
last year, calf prices are 9 percent higher, reflecting the
lower feed costs," Hurt noted. "Beef supplies so far this year
have been slightly below the same period in 2004. Modestly lower
supplies with somewhat higher prices suggest that beef demand
continues to remain about as strong as it was last year."
However, Hurt noted that several foggy issues remain for the
cattle market in coming months.
"The first is still the growing imports of Canadian cattle,"
he said. "In September, the number of live cattle imported from
Canada was about 3 percent of slaughter. However, the October
numbers are closer to 4 percent of slaughter. In the last year
before the restrictions beginning in May 2003, the United States
imported nearly 5 percent of its slaughter as Canadian live
animals.
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"A second point is that the feeder animals that have been imported
since mid-July have not come to slaughter yet. These feeder animals
have represented 45 percent of the total Canadian live imports so
far."
Clearly, Hurt added, feeder animals from Canada are just
beginning to show up in feedlot numbers. The latest USDA on-feed
inventory showed that 10.5 million head of cattle were in feedlots
-- virtually unchanged from a year ago but more than expectations
prior to the report. The number of heifers that were on feed, which
was down 11 percent, continues to reveal a preference for retaining
females for breeding herd replacements.
The number of steers, on the other hand, was up 6 percent.
Placements at 99 percent were at the high end of expectations, and
marketings were also somewhat lower than expected.
"Some of the recent price optimism is related to the potential to
open U.S. beef exports," Hurt said. "The Japanese have mentioned the
possibility of opening their market this year. Thailand, a small
market, has apparently ended its restrictions on our beef imports,
which had been in place since the first case of mad cow disease, in
December 2003.
"Optimism is friendly to cattle prices, but the beef industry has
had other optimistic moments in the past two years, just to see hope
fade."
Prices for finished steers are expected to be in the mid- to
higher $80s this fall and in the lower $90s this winter.
"Calf and feeder cattle prices are expected to be near
record-high this fall as well," Hurt said. "Steer calves weighing
500 to 550 pounds are expected to average $125 to $135 per
hundredweight this fall, while feeder cattle are expected to average
$110 to $115 per hundredweight."
[News release from the
University of Illinois College
of Agricultural, Consumer and Environmental Sciences] |
