031142 Experts Say Beef Prices Will Stay At Historic Highs

Steer prices a week ago averaged $1.04 per pound, while finished steer prices hit a record $115 per cwt during October. Anaylsts say this year may go down as the best ever, and cattle producers are selling just about anything on the hoof to take advantage of the high prices.

The market psychology is "let's rush them to market" says Ernie Davis, Texas Cooperative Extension livestock marketing economist.

"Our placements in feedlots are expected to be 10% higher at least from a year ago," adds Jim Robb, director of the Livestock Marketing Information Center in Denver. "Clearly, this is a very unique set of market circumstances."

How long will the high prices last? Davis and Robb say prices will remain historically high into the first quarter of 2004, though they'll likely dip from the record levels seen in October.

The two say several key factors are fueling the current market:

* All eyes are on Canada and when it will be allowed to resume trading of live cattle across its border. "That's at least four months down the line," Davis estimates. He says the earliest the market could open is in March.

* Attention is being paid to feedlots. The feedlots hold all of the cards, says Robb.

"They don't need to market animals until the packers come to them," he said. "That will go on for three or four more weeks. I suspect by the time we get to December, we're trading lower fed cattle prices still at historically high levels, but they are getting into the 90s mostly as opposed to the $1 (per pound) range. That's still the highest prices we've ever posted barring this year or this quarter."

* The price of corn. USDA is projecting a record US corn crop this year. With prices hovering around $2 a bushel, many feedlots aren't too worried about the price of corn. However, a poor corn crop in 2004 could change the price of cattle. "If you have a short corn crop, most of the adjustment will be on the cattle side, which means cow-calf prices have to adjust accordingly," Robb said.

* Expect the nation's beef cow inventory to be tighter by January 1. Davis and Robb expect fewer cows will be slaughtered in 2004 because they will be worth more due to limited beef cow numbers.

"We have this changing story out there," Robb said. "From a rancher's perspective, these cull cows could be worth far more than they were in 2003. I'm hearing purebred bulls are selling from $300 on up to $500 higher than a year ago."

Davis said, "We're still trying to set the long-term stage for the cattle cycle. We've delayed this cycle another year."

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