050514 Beef, Pork Industries Enjoy Record Prices

The year is off to a record start for cattle prices, and 2004 wasn't so bad, either, said Chris Hurt, Extension economist at Purdue University.

Cattle prices keep setting records as evidenced in the first quarter of 2005, with Nebraska finished steers rolling in at an $89 average, 8 percent higher than during the same time last year.

Hurt said the strength in cattle prices is a result of both reduced supplies and strong consumer demand.

"Beef supplies for the first quarter were down 2 percent due to a 6-percent drop in cow and heifer supplies," Hurt said. "That indicates females are being retained for herd rebuilding. More females in the breeding herd means U.S. beef supplies will grow in 2006 and later, but for now, it means reduced domestic beef availability."

That accounts for a Dow Jones Chicago Mercantile Exchange Cattle Outlook report saying, "Beef wholesalers and their customers are complaining about the highest Choice-beef prices in more than a year, but are buying the product, nonetheless."

Cattle Outlook reported, too, that because wholesale beef is higher, packer profit margins are positive, coming in at $14.15 per head. Feedlots would like a greater share of the higher beef value, but packers will try to hold the cash live-cattle price line Cattle Outlook said.

The Grimes and Plain report from the University of Missouri quoted yield grade 3 Choice beef at $157.57 per hundredweight and yield grade 2 came in at $142.45 per hundredweight. Fed cattle prices averaged $93.92 per hundredweight and the weighted average carcass price per hundredweight increased by nearly $5 to $149.50 per hundredweight.

Price increases are the name of the game for pork producers this year, too. Pork producers are seeing profits like they've never seen before due somewhat to record-level exports, said Steve Meyer, economist for Paragon Economics.

"Exports are up over 60 percent," Meyer said.

He attributes the big rise to increased demand in variety meats or organ meats.

"To Mexico, the value of variety meats increased 117 percent and to China, the value went up over 500 percent," Meyer said.

Don Beuhle, president for the National Pork Producers Council, said 96 percent of the world's population "lives outside our borders" so expanded trade is good for all ag industry segments.

"We need access to those markets, but we don't expect preferential treatment," he said.

Beuhle said pork profits are a "very, very welcome change" and it will give producers a chance to "seal up the balance sheets and pay off some debts."

Meyer predicts growth in the breeding herd for 2006-2007, as swine production is on about a four-year cycle and producers are hoping for stable, high prices to continue through that cycle.

With a bumper corn crop from last year, Meyer said pork producers' profits could be even better for 2005 if feed costs stay low.

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