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Cattle-Fax was the bearer of good news with its 2002 Outlook, stating that renewed profitability should be on tap for all segments of the industry. Cattle-Fax specialists revealed that total cattle inventory on Jan. 1, 2002, was 96.7 million head - 573,000 head smaller than a year earlier. This is the sixth consecutive year of declining cattle numbers. The 2001 calf crop totaled 38.3 million head, down by 350,000 head from the previous year. This is the seventh consecutive year for a decline in calf crop numbers. "Cattle inventories should begin to grow during the next 12 to 24 months, provided Mother Nature cooperates so producers can begin restocking and expanding," states Randy Blach of Cattle-Fax. Another number of interest to producers is cattle on feed which stood at 13.9 million as of Jan. 1. This is two percent smaller than last year's record total, and the third largest since 1973. Blach noted that placements of feeder cattle into feedlots during 2001 were smaller in eight out of 12 months than in the previous year. Blach attributed this primarily to the extremely large placements the year earlier and concerns of high replacement costs and of breakeven during the second half of last year. "Smaller placements during the last five months of 2001 will lead to smaller available fed cattle supplies through the first and second quarters of 2002," Blach stated. "Prices are expected to rally into the spring, as cattle feeders are able to become more current in their marketings and gain bargaining position." Cattle-Fax predicts a decline of about 500,000 head in fed cattle slaughter. This would put fed cattle slaughter for 2002 at 28.5 million, down about two percent. Also expected to fall is beef production for the entire year. Cattle-Fax estimates that beef production to total 25.6 billion pounds, a 2 percent fall below 2001 levels. "As feeder cattle supplies tighten through the year, placements into feedlots will slow down, and cattle-on-feed numbers will begin to decline and drop below year-earlier levels," Blach notes. "In addition, average slaughter weights are expected to moderate during the year as feedlots become current in their marketings." Directly related to the supply of beef is per-capita beef consumption, and, as beef supply goes down so can drop per-capita beef consumption. In line with this, Cattle-Fax predicts a decline of per-capita beef consumption, the third year in a row for a decline. "Even though demand has improved during the past several years, and is expected to remain strong," Blach states, "there will simply be less beef available to spread among a growing number of consumers." Blach predicts that this trend will continue for the next several years - until herd expansion gains enough momentum to grow feeder cattle and calf supplies. Not news to the feeders is the fact that cattle feeders lost $15-$20 per head on average during the past year. "This tremendous loss of equity will limit price increases for feeder cattle and calves through the first half of the year," Blach states. He adds that cattle feeders, stocker operators, backgrounders and cow-calf producers should all experience more consistent and positive profit margins during 2002. Cattle-Fax specialists estimate fed-cattle prices should average about $72-$73/cwt, slightly higher than last year. Feeder steers weighing 750 pounds are expected to average about $86/cwt, down about $1/cwt due to losses incurred in feedlots during the second half of 2001 and early 2002. Steer calves weighing 500 pounds are expected to average about $104/cwt, about $1.50/cwt lower than a year earlier. Grain prices are expected to remain low during 2002. Although corn prices are tied to the weather, Cattle-Fax figures says current supply and demand indicate a fairly moderate year. "Total corn acres planted are expected to increase which should lead to a larger U.S. crop," Blach explained. Continued fallout of the BSE discovery in Japan continues to impact U.S. beef export tonnage. In the end, Cattle-Fax figures indicate that exports of beef are expected to decline by three percent-five percent in 2002 from 2001 levels. On the flip side, imports will increase due primarily to the higher prices for lean trimmings and a strong U.S. currency. Cattle-Fax specialists are predicting beef demand to rebound during the first half of the year as food service and export movement improves. Pushing beef demand along are significant increases in retail featuring activity. "Solid demand coupled with smaller available supplies should mean steady to higher trending prices during the next two to three years," Blach states For a complete report, contact Cattle-Fax, PO Box 3947, Englewood, CO 80155, phone (303) 694-0323. Cattle-Fax is a member-owned and member-directed marketing information, analysis, research and educational service organization, serving beef producers in all segments of the industry. |
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