For Immediate Release                                                                                                                           Oct. 25, 2003

For Information:  Burt Rutherford at TCFA
                            Randy Blach at Cattle-Fax  (303) 694-0323

MARKET OUTLOOK POSITIVE, BLACH TELLS CATTLE FEEDERS

            Robust beef demand combined with larger exports, smaller imports and a tightening domestic cattle supply provided an October market kick that left cattlemen shaking their heads in wonder.

            "Does that mean what we experienced a week or two ago was real?  It was probably an extreme," according to Randy Blach, executive vice president of Cattle-Fax in Denver .  "But we think fed cattle prices will average in the lower to mid $80s for 2003 and range from the mid $90s to the mid $70s for the year.  And we'll continue to trade cattle at a high trading range in 2004 and likely into 2005."

            Speaking at the 2003 Annual Convention of the Texas Cattle Feeders Association (TCFA) in Amarillo , Blach told cattle feeders that it's difficult to separate demand from bargaining position when you get into a market like 2003 has seen.  "Obviously, we've had a tremendous amount of bargaining position in this market, as current as we've been over most of 2003."

            Currentness has been the key, he said.  "Through the late summer and fall, we had a record small carryover of fed cattle and that carryover supply will stay extremely small at least through the first quarter of 2004.  That small carryover and declining carcass weights have been a huge driver in the market."

            That, coupled with surging demand, has given the fed cattle market an upward ride that is nothing short of astounding.  "Prior to this year, the demand growth had been worth about $100 per head to the value of fed cattle," Blach told cattle feeders. 

Some of that demand growth was derailed as a result of 9-11 and it took the industry until the middle of 2002 to recover.  "Since then, we've seen steady growth.  In each month in 2003, we've seen record beef demand.  That demand growth has been worth at least $200 per head on the value of fed cattle."

            Looking at it in another way, Blach said consumers are now spending about $14 billion a year more on beef than they did in the 1990s.  And that spending has stayed very strong even in the face of rising retail prices, leading many to believe that consumer demand will continue to be a factor in the cattle market for some time to come. 

            The final factors that combined to make the market this year were imports and exports.  Imports are down 14% on the year, Blach said, due mainly to the Canadian border closing and sustained drought in Australia .  Exports of U.S. beef are up between 7% and 8%.  "Obviously, we'll see a continuation of trade with Canada sometime during the first half of next year.  But with no expansion taking place yet in the U.S. cattle herd, we'll still see a decline in available supplies."

 In fact, Blach says net beef supplies in 2003 compared with 2002 will be down close to 1 billion pounds.  From 2003 to 2004, net beef supplies should drop another 300 million to 400 million pounds.  

"The market structure is still very positive.  We've got a market that's built on a discount futures market, we've got a good swap on feeder cattle, even though we're buying the highest breakeven in history, and continued profits on fed cattle will encourage aggressive fed cattle marketings."                                                                                                 

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