Beef cow numbers rising
By LORI POTTER ,
Kearney Hub Staff Writer
COZAD — The cattle industry has entered a rebuilding cycle that probably won’t have major price effects for at least another year.
“We are growing the herd again,” Agricultural Marketing Specialist Dillon Feuz of Scottsbluff said Wednesday at a Cornhusker Economies Management and Outlook Conference in Cozad sponsored by the University of Nebraska-Lincoln Extension. “Usually when you see these turn-ups, you see a couple more years of good prices.”
Feuz said U.S. beef cow numbers are up by 1 percent from a year ago, totaling 33.3 million. Dairy cow numbers also are up slightly.
The U.S. Department of Agriculture reported that the estimated 97.1 million head of cattle and calves as of Jan. 1, 2006, was 1.7 percent more than a year ago and the largest number since 2001.
Feuz said ag economists must look back to the 1960s to find a tight calf supply similar to the past couple of years. He said the tight supply and larger feedlot capacity have created a high demand and high prices for feeder calves.
According to the UNL publication “Cornhusker Economics,” 550- to 600-pound feeder steers sold for an average price of $126.16 per hundredweight a year ago and $140.88 on Jan. 27. Feuz said in a written report that feeder calf prices will remain relatively high in 2006, but decline to about $120 by the fourth quarter, when the anticipated larger 2006 calf crop will be available.
Cattle feeders are paying more than they’d like for calves, he said Wednesday, but they still can make profits because of low feed prices and beef demand that has remained high despite fewer exports since the first U.S. case of bovine spongiform encephalopathy was confirmed in December 2003.
Heifer replacements are up 4 percent in the past year, Feuz said. At 5.9 million head, it’s the largest number of heifers held as beef cow replacements since 1997.
That’s another demand for calves and a sign that cow-calf producers are rebuilding herds, he said. As calf numbers increase in the next year or two, calf prices can be expected to drop.
For now, “cheap corn is still in place and higher-priced calves are still in place,” Feuz said.
Those conditions and expectations in 2005 of higher beef prices in the future were incentives for producers to feed calves longer and to heavier weights. That resulted in more pounds of beef on the market, which Feuz said was reflected in downward price pressure toward the end of 2005.
In a report done with UNL Extension Livestock Marketing Specialist Darrell Mark, Feuz wrote that fed cattle prices are expected to be at or below 2005 levels throughout the first half of 2006. Futures-based price forecasts suggest that slaughter cattle prices will remain in the low $90s through April and then seasonally decline into July.
Feuz said there could be lower prices in 2007 “particularly if we don’t gain enough export markets to offset that (increased) production.”
Meanwhile, the U.S. inventory of hogs and pigs has grown steadily since 1998, Feuz said, and export markets have been “tremendous” as pork gained markets lost to U.S. beef.
Forecasts of higher pig crops and farrowing intentions mean “we’re setting ourselves up for an increased supply of pork … in the second or third quarter,” he said.
The Mark-Feuz report says, “Given the high pork production and soft demand expected for 2006, look for prices to average 10 percent lower or more in 2006.”
Feuz said poultry production is another major market factor.
“They (poultry producers) continue to expand production and most of the time, they figure out how to do it at a cheaper price, which makes it difficult for beef and pork,” he said.
Because chicken is selling below the five-year average, a boneless, skinless chicken breast can cost less than ground beef. Feuz said fast food restaurants are promoting their “chicken between the buns” products now because profit margins are greater.