Cattle Feeders’ Gill Offers
Market Outlook For New Year

AMARILLO — As goes the corn market, so goes the fed cattle market, said Jim Gill, market director for the Texas Cattle Feeders Association. Speaking at the annual TCFA Year End News Conference here during the holidays, Gill said fed cattle prices will take their cue from several factors, with grain supplies and competitive meat supplies leading the list.

Corn production in 1997 was estimated at 9.3 billion bushels, about the same as 1996 and considerably higher than the 7.4 billion bushels in 1995. And all it takes is a look at the disastrous fed cattle market in 1995 to see how important corn production is to cattle feeders, he said.

"For 1998, corn production is expected to again range from 9.3 to 9.5 billion bushels, given normal weather, which should provide continued price stability for feed costs. However, exports will play a crucial role in prices, and the instability in the Far East and Pacific Rim countries will likely have a major impact on final prices to area feedyards."

The other stick stirring the fed cattle market in 1998 will be competitive meat supplies.

"Pork and poultry will continue to offer stiff competition to beef prices," Gill said, with record production expected for both species. "Pork production in 1998 is expected to be near 18.2 billion pounds, up seven percent from 1997's 17.1 billion pounds. Poultry production is expected to increase another three percent to 34.3 billion pounds, compared with three billion pounds in 1997."

He forecast a decline in beef production, however, driven by cyclical factors that indicate herd liquidation is nearly over. Gill expects beef output to settle around 24.4 billion pounds, five percent below the 25.7 billion pounds last year. "This will be the first year to show a decrease in beef production since 1993 and will put annual consumption near 64 pounds. on a retail weight basis."

While tighter beef supplies usually mean higher retail prices, the heavy supplies of competing meats will keep retail prices in check, giving consumers continued affordability at the meat case.

"Retail beef prices averaged $2.79 per pound in 1997," Gill noted, "down about eight cents from $2.87 per pound in 1996. While retail beef prices will increase somewhat, they shouldn't exceed, as an average, the 1996 benchmark of $2.87," Gill predicted.