Contact: Burt Rutherford                                                                                                 Dec. 20, 1999

INDUSTRY OUTLOOK FOR 2000

If cattle feeders liked what they saw the last half of 1999, they should find the "Millennium Year" of 2000 to be much to their liking as well, as the outlook for tightening beef production projects continued health in the fed cattle market.

"That's good news for cattle feeders who are healing from two or three challenging years," says TCFA Market Director Jim Gill, whose outlook for 2000 is a mixed bag of bright spots and caution lights for cattle feeders. Gill offered his predictions today during the annual TCFA Year-End News conference.

"Beef production in 2000 will be near 25.5 billion pounds, 3% below the

26.2 billion pounds in 1999," Gill predicted. "This will be the first year to show a decrease in beef production since 1993 and will put annual consumption near 68 lbs. on a retail weight basis. Average carcass weights are expected to be lower than the record 736 lbs. in 1999, dropping to a more normal 700 lbs. to 705 lbs."

However, pork and poultry will continue to offer stiff competition in the protein market. Gill expects pork production in 2000 to be near 18.5 billion pounds. "While that's down 3% from the record 19.3 billion pounds in 1999, it's still well above the past 5-year average of 17.8 billion pounds," he says. Poultry production is expected to increase 4% to 42.9 billion pounds in 2000.

Taking all the factors into account, Gill predicts cattle feeders will see fed cattle prices range from $67 to $71 per cwt. in the first quarter; $66 to $72 in the second; $68 to $72 in the third quarter; and $72 to $76 in the fourth quarter.

Looking at the feeder cattle market, Gill says feeder cattle supplies will continue to tighten over the next few years, reflecting the liquidation that has been ongoing since 1996. "Prices for a 750 lb. feeder steer, which averaged near $74 in 1999, will average in the high $70s during 2000," he predicted.

Grain prices, which stayed competitive in 1999, will continue to play a strong role in cattle feeders' purchasing and placement behavior, Gill says. "Corn production during 2000 will likely again be near the 9.5 billion bushel level we saw in 1999. However, exports will play a pivotal role in grain prices and will likely lift average prices above 1999's low levels."