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2001 Looks Positive for Cattle Feeders, Says Market Analyst "Cattle feeders ended the year with a stronger market than many anticipated, and Santa Clause himself couldn't have done any better," according to Jim Gill, market director for the Texas Cattle Feeders Association. "In many respects, 2000 was a turnaround year for cattle feeders," Gill says. "Large numbers of market-ready cattle and record large weights plagued feeders much of the year. But it appears we've turned the corner and 2001 looks very positive." Gill estimates fed cattle will sell $70 to $75 in the second quarter, $68 to $72 in the third quarter and $76 to $80 in the fourth. Cow-calf and stocker operators will enjoy continued market strength as well. "Feeder cattle supplies will continue to tighten over the next several years. Prices for a 750 pound feeder steers,which averaged near $85 in 2000, will average in the low $90s during 2001," Gill predicts. Cattle prices will take a cue from beef production, which will be near 26 billion pounds in 2001, 3.1 percent below 2000, he says. "This will be the first decrease in beef production since 1993 and will put annual per-capita beef consumption around 66.5 pounds on a retail weight basis." Gill says the drop in beef production will stem mainly from the expectation that average carcass weights will fall back from the record 745 pounds notched in 2000. "We placed a lot of lightweight calves in the last half of 2000 and particularly the last three months. Lighter weight calves produce lighter weight finished cattle, which yield lighter weight carcasses." However, competitive meat supplies will remain a challenge. Increases in pork and poultry production will offset the decrease in beef production, bringing total meat and poultry production to around 83 billion pounds, a 0.5 percent increase over 2000. Pork production will be near 19.4 billion pounds, a 2.5 percent increase, and poultry production will be near 37 billion pounds, a 3.4 percent jump. Grain prices, which played a major role in 2000, will continue to be a factor in cattle feeders' purchasing and placement decisions, Gill said. "Corn production in 2000 was estimated at 10.05 billion bushels, up 6.5 percent from 1999. Production in 2001 will likely again be around 10 billion bushels. Changes in the farm program could eventually influence grain production, but it's unlikely to have much effect in the 2001 crop year." Consumer demand for beef took a strong upswing in 2000, which is expected to continue into 2001. Retail beef prices averaged $2.95 per pound in 2000, up about 10 cents from 1999. "With the anticipated drop in beef production in 2001 and continued improvement in demand, prices may edge higher and reach an average of slightly more than $3.00 per pound during 2001. |
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