|
"In this manner, higher feed costs will eventually be passed to
beef consumers," said Chris Hurt. Hurt's comments came as he
reviewed the effects of higher feed costs on beef producers.
"Beef producers seem to understand that they will have to
reduce the number of females in the herd in order to reduce beef
production by 2009," he said. "That process appears to be
started but will take some time."
For now, he noted, there are more cattle in feedlots than had
been expected. On April 1, the USDA estimated there were 11.6
million head of cattle in feedlots with 1,000 head or greater
capacity. This is the second-highest April 1 total on record.
"Placements into feedlots during March were up by 7 percent,"
he said. "The large placements appear to be related to the low
number of smaller calves put into feedlots last fall and winter.
Those calves have now grown and are entering feedlots at heavier
weights.
"As an example, from November 2006 through February 2007,
placements of calves weighing less than 600 pounds were down 21
percent as corn prices were booming. The data for March show
that placements of calves weighing over 700 pounds were up 11
percent. In addition, lower corn prices may have helped
stimulate March placements."
May corn futures, for example, dropped 61 cents per bushel in
March, although 20 cents came on the last day of the month. Of
equal importance was the strength of live cattle futures. August
futures were as low as $88 in early February but rallied to
highs above $95 in March.
"There are strong indications that the nation's breeding herd
is being reduced," he said. "One indication is the high rate of
cow slaughter. In the last quarter of 2006 and the first quarter
of 2007, cow slaughter was 14 percent higher than in the same
six-month period a year earlier.
"In addition, the current number of heifers in feedlots
headed for slaughter remains nearly 4 percent higher. High cow
and heifer slaughter are strong indications that the midyear
cattle inventory report to be released on July 20 will show a
smaller breeding herd."
[to top of second column]
 |
Where have prices been and where are they headed? Hurt asked.
For the first quarter of 2007, Nebraska-finished steers averaged
$90.70 per hundredweight, which was $1.50 higher than the price in
the same quarter in 2006."This was an
impressive showing, given that beef production was up over 2 percent
for the quarter," said Hurt. "The number of head coming to market
was up 4 percent, but average weights were nearly 2 percent lower
because of high feed prices."
Calf and feeder prices bore the brunt of high feed prices in the
first quarter. Steer calf prices, as measured by Oklahoma City 500-
to 550-pound steers, were $10.30 per hundredweight lower, a drop of
8 percent from year-previous levels.
Feeder steer prices were down $6.50, or 6 percent. The picture
was even more dismal for the prices of heifer calves, which were
down $16.85 per hundredweight, or 13 percent.
"The negative impact of higher feed prices on the cow-calf sector
was estimated at $1.2 billion in the six months from October 2006
through March 2007," he said. "This puts the industry on track to
have in excess of a $2 billion annual negative impact from higher
feed prices."
After reaching highs at $100 per hundredweight in early April,
finished cattle prices are expected to move into the low to mid-$90s
for the spring quarter. Summer prices are expected to be a few
dollars lower and average in the very high $80s to low $90s. Fall
prices are expected to average near the mid-$90s.
"Feeder cattle and calf prices may face the greater uncertainty,
given the potential volatility of the corn market," Hurt said.
"Steer calf prices are expected to trade in the $115-to-$125 range
this summer and then $110 to $120 this fall.
"If the large corn acreage does get planted this year, and with
normal or better weather, those calf prices could easily be $5 to
$10 higher by the fall."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
|
