Beef
Outlook Steady for 2005, Says TCFA
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Beef producers and consumers alike can look forward to steady prices
for 2005, according to Jim Gill, market director for the Amarillo-based
Texas Cattle Feeders Association (TCFA).
Speaking at the annual TCFA year end news conference, Gill said a
projected two to three percent increase in beef production in 2005
will push average retail beef prices to around $4 per pound, slightly
below the $4.05 average in 2004. “However, the anticipated reopening
of the Japanese beef market some time in 2005 should prevent prices
from falling any lower,” he said.
In addition, beef prices will continue to be challenged by competing
meats, as Gill predicts that both pork and poultry supplies in 2005
will increase two to three percent above 2004 production levels. However,
Gill predicts a continued strong consumer demand for beef, which will
tend to keep retail prices steady, he said.
Fed cattle prices will trade from $80 to $92 in 2005, Gill predicted.
His outlook shows fed cattle prices ranging from $85 to $92 in the
first quarter of 2005; $80 to $90 in the second and third quarters;
and $85 to $90 in the fourth quarter. That’s a similar trading
range to 2004, he said, adding that 2004 prices in the fourth quarter
have been supported by the weather.
“Weather has been the developing story in the industry for the
past two months,” he said. “Following a wetter-than-normal
fall and early winter, production in feedyards has been reduced and
cattle marketings have been delayed. This has supported fed cattle
prices but, as with weather markets, the price increase has not offset
the production setback.”
Feeder cattle supplies will continue to tighten over the next couple
of years, he said, reflecting the liquidation that has been in effect
since 1996. “A 750-lb. feeder steer averaged near $103.98 in
2004—more than $15 higher than 2003.” However, losses
in the packing industry are translating into lower bids for fed cattle
in feedyards, which could put pressure on feeder cattle prices. “It
is likely the same 750-lb. feeder steer will average in the mid $90s
in 2005.”
Looking at the grain markets, 2004 corn production is estimated at
a record 11.9 billion bushels, which will put pressure on prices.
“Corn prices, which averaged near $5.04 per cwt. in 2004 in
the TCFA area, will likely be closer to the 2003 average of $4.75.
However, a very strong export market will prevent prices from falling
much below that level.” ©
