Cattle feeders, coming off one of the most difficult years ever, have a little glimmer of positive news for the New Year as profitability has returned to Cattle Feeding Country. With a little luck and attention to breakevens, it may hang around for a while in 2003 as well, says TCFA Market Director Jim Gill.

Gill said fed cattle prices, which cracked the $70 barrier in November and December, could well remain steady to strong the first half of 2003. Prices for the first part of 2003 will be driven by reduced placements the past few months that will tighten the supply of fed cattle coming to town this winter and early next spring.

"For the first quarter of 2003, fed cattle prices should range from $73 to $78 per cwt.," Gill estimates. "Second quarter prices are estimated to range from $70 to $76." Cattle feeders should see prices range from $66 to $72 in the third quarter and from $68 to $74 in the fourth quarter.

"Feeder cattle supplies will continue to tighten over the next couple of years, reflecting the liquidation that has been in effect since 1996. Prices for a 750 lb. feeder steer, which averaged $79 in 2002, will average in the low to mid $80s during 2003 due to continued tight supplies and profitability returning to the cattle feeding industry in late 2002," Gill said.

Those tighter supplies will be reflected in beef production, which Gill pegs at 26.1 billion pounds in 2003, 4% lower than 2002. "This will follow this year's record production of 27 billion pounds and will put annual per capita consumption near 65.8 lbs. Average carcass weights are expected to continue higher than normal, but will drop below recent record levels."

While competitive meat supplies will keep pressure on the beef complex, total meat production should be manageable. "Pork production will likely show a minimal reduction in 2003, dropping from 19.7 billion pounds to 19.3 billion pounds," he estimates. "Meanwhile, poultry production will increase at the slowest rate in several years, going from 38.9 billion pounds to 39.9 billion pounds on a ready-to-cook basis."

Cattle feeders should see sufficient grain supplies in 2003, with corn production in 2002 estimated at nine billion bushels, down five percent from 2001. Production will likely notch up a bit during 2003, hitting from 9.7 to 9.9 billion bushels. If better than normal weather prevails, Gill says corn production could top 10 billion bushels for the first time since 1994.

For consumers, beef prices should remain steady. "Retail beef prices averaged $3.31 per pound in 2002, down seven cents from last year's $3.38," Gill said. "An unexpected turnaround in beef demand in the U.S. starting in 2000, coupled with improving export markets, prevented prices from dropping even lower than the increased production of beef and competitive meats otherwise would have indicated. Sharp increases in exports to Mexico and South Korea compensated for a drop in export demand in Japan ." ©