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Texas Agriculture Archive

February 6, 2004

Beef prices: 'Strong'


By Lana Robinson
Field Editor

Although the first case of mad cow disease in the U.S. has caused prices to drop from record levels, the impact has been minimized, and producers can look forward to strong prices in 2004, according to Dr. Ernie Davis, Texas Cooperative Extension livestock marketing economist.

Presenting the 2004 market outlook to a crowded room of beef cattle producers attending the 42nd Annual Blackland Income Growth Conference in Waco, Jan. 20, Davis said, "Prices are less than what we had originally forecasted, revised down from $11 to $14 per hundred weight for each weight class. But when you look at prices, you'll see they are relatively high. It may rebound better than we thought."

How come? Davis said short cattle inventories, along with strong consumer demand spurred by beef checkoff-funded marketing programs and the Atkins diet, are having an effect.

Davis's Texas forecasted prices for 2004 peg fed cattle at 69 to 74 cents; 7-8 feeders at 80 to 87 cents; and 5-6 feeders at 94 cents to $1.01.

He also predicted that trade with Mexico would likely resume in late February for meat from cattle less than 30 months of age. However, he said getting Japan back onboard would take longer.

"We're not going to regain the Japanese market until we find those 80 cows that came from Canada. We've still got about 61 more of those cattle to go," he reported.

Seasonal prices will remain strong through the year, he predicted.

"We may have a pattern like we had last year. When we open up those foreign markets after the first half of the year and start shipping to Japan and Mexico, we're not going to have that many cattle on feed. We could have a similar price scenario this year," he said.

Right now—for good or bad—the market is feeling the effects of the BSE probe, a continuing drought in parts of the nation, domestic demand and food safety issues. The banning of U.S. beef by several countries in the wake of the mad cow discovery in Washington state in December came on the heels of market impacts caused by the earlier detection of a BSE-infected cow in Canada.

"We already had a ban on Canadian cattle, and throughout 2003, we still have continued herd liquidation. We've had that liquidation since 1996. It will be interesting to see in 2004 if we have moisture and range conditions to expand that herd or not," Davis said.

Davis suggested that with cow prices as high as they have been, many producers have sold heifers they might ordinarily hold back.