Economist Is Hopeful for $70 Cattle in Second Quarter of 1999

An economist with the Texas Cattle Feeders Association is looking for $70 cattle in the second quarter of 1999.

"The outlook for 1999, I certainly think it will be a better year than 1998," TCFA economist Jim Gill said as 1998 drew to a close. "At least, I certainly hope so."

Although Gill is predicting higher prices for fed cattle, he doesn't think the consumer will notice much difference at the meat counter.

"As for beef prices, I think that during the year of 1999, the consumer won't see much difference at the retail outlet," Gill said. "Right now, the retailer is working with a pretty wide margin. As our live prices start to move higher, I think the retailers will maintain the same average price they've had. I hope that what will happen is the industry will get back some of that margin that the retailer is working on right now."

"For most of the year, fed cattle prices have been below the cost of production," Richard McDonald, President and CEO of the Texas Cattle Feeders Association, said today. "This is very similar to other segments of agriculture. Most all of agriculture has not had a good year.

"The cost of production was above the price that we received most of the year," Gill said. "I think an average loss for 1998 was around $100 a head. Right now, we're doing a little bit better than that."

As Christmas, 1998, approached, losses were running about $20 to $30 a head.

"I think in the first quarter we'll still have some supplies to work off the cattle market," Gill said. "Cattle have been at record weights this year. I think sometime in the first quarter of 1999, we'll see a downturn in weights."

The livestock economist said he is already beginning to see a seasonal downturn in cattle weights.

"I think in 1999 we'll be back to a more traditional weight on these live cattle which will reduce production," Gill said. "I hope that by the second quarter of 1999, we'll see some improvement in cattle prices. Maybe this business will get back to a profitable position."

He said there are still supply problems to work through in the first quarter of 1999, but he predicts fed cattle prices to be in the mid to high $50 and low $60 range.

"I think sometime in the second quarter, we'll see prices get back to the mid to high $60 range," Gill said. "We might even touch a $70 market, although a lot of people don't think that's possible."

Gill said he expects live cattle prices to drop back a little in the third quarter with a seasonal decline in the fourth quarter of 1999. He's predicting somewhere between $64 and $69 in the third quarter, then down to $63 to $68 in the fourth quarter.

"The competitive meat supply is the main problem," he said.