 "Pastures and ranges have returned to favorable conditions for much
of the country, including the Northeast, the Southeast, the Midwest
and the northern Great Plains," said Chris Hurt. "Improvement is
also noted for the central and southern Plains, although drought
conditions are still lingering. Texas, Oklahoma and Kansas have
received some recent rains that may help to continue the abatement
of drought. Nationally, 73 percent of pastures are rated in the
fair, good or excellent condition this year, compared to only 46
percent at this time last year.
"Markets are expecting feed prices to drop sharply when new-crop
harvest gets underway. New-crop corn prices are about $2 per bushel
lower than nearby bids, and fall soybean meal prices could be as
much as $200 per ton lower than current scarce old-crop offers,"
Hurt said.
He said that beef cow operations in some parts of the country
where pastures have been restored are probably getting ready to
retain heifers. Beef cow numbers have declined in the Southeast by
about 700,000 head, or 12 percent, since 2007. Midwest numbers have
dropped by 680,000 head, or 14 percent, since 2007. Both of these
areas should have the pasture and the feed to begin heifer
retention. The northern Plains is another area that is ripe for herd
expansion.
"On the other hand, pasture and range recovery have not reached a
critical mass for expansion in the central and southern Plains and
western United States," Hurt said. "These regions include 43 percent
of the beef cows and have had a 14 percent drop in those numbers
since 2007. More rain and more improvement in pastures and ranges
will be required," he said.
According to Hurt, the initial retention of heifers will likely
occur this fall in areas primarily east of the Mississippi River,
plus the Delta, the western Corn Belt and the northern Great Plains.
This is a large area that currently has 57 percent of the nation’s
beef cows.
"Lower feed prices alone will not be enough to get retention
started, but higher calf prices will be required as well," Hurt
said. "That process is also underway. Oklahoma 500- to 550-pound
calves have increased by about 15 cents per pound since early June,
and 600-to 650-pound steer calves have increased by 13 cents per
pound. Current prices are $1.65 and $1.55 per pound, respectively."
However, Hurt added, these levels are not likely to stimulate any
major beef cow herd expansion. It is more likely that prices of
$1.75 to $2 may be required to convince brood cow operations to move
aggressively toward more cows.
[to top of second column] |
"The already low inventory of finished cattle and some added
heifer retention will keep beef supplies falling in the coming 12
months," Hurt said. "USDA expects beef production to be down about 4
percent in the last half of 2013 and by 5 percent in the first half
of 2014. This should provide the foundation for finished beef prices
to average in the higher $120s to low $130s. These finished cattle
prices, along with lower feed prices, should propel calf prices back
to $1.75 per pound and higher," he said.
Finished cattle prices are expected to trade in the low $120s per
hundredweight in the third quarter but move to the higher $120s for
the final quarter of 2013. First-half 2014 prices are expected to
average near $130, with early spring highs in the low to mid-$130s.
Calf and feeder cattle prices should follow the finished cattle
prices higher, especially as feed prices also drop.
"The industry may see the start of heifer retention this fall,
but the magnitude of expansion is expected to be low and slow to get
underway," Hurt said. "Beef cow producers know that expansion of the
herd is a long-term investment and generally want an extended period
of favorable returns before making major financial commitments. In
addition, nearly half of the country’s cows are in regions that have
not yet fully emerged from the drought."
Hurt said that prices of calves may need to move closer to $2 per
pound to provide the incentive that will provide for a more major
beef expansion.
"Both the poultry and pork industries are set to increase
production rapidly as feed prices decline," Hurt said. "Retail beef
prices, already at record highs, will move even higher in the coming
12 months -- at a time when poultry and pork price increases are
moderating or even falling. This will mean stiff competition for
beef among domestic and foreign consumers," he said.
[Text from file received from the
University of Illinois College of Agricultural, Consumer and
Environmental Sciences] |
