For Immediate Release    
Dec. 18, 2003

Contact: Jim Gill or Burt Rutherford

Industry Outlook Positive For 2004 

            Cattle feeders, coming off a year that can only be described as incredible, can look forward to continued strength in the fed cattle market, according to TCFA Market Director Jim Gill. 

            Speaking at the annual Year-End News Conference of the Texas Cattle Feeders Association (TCFA), Gill predicted fed cattle prices would range from $90 to $98 per cwt. in the first quarter of 2004; $83 to $90 in the second quarter; soften to $78 to $86 in the third quarter; and rebound to $85 to $94 in the fourth quarter. 

            "Following three years of extreme equity losses from 2000 through 2002, the cattle feeding industry finally responded with reductions in placements in late 2002 and early 2003," Gill said as he explained the factors that contributed to this year's record prices.  "Prices traded $3 to $5 over previous year levels until late July, when an incredible run-up in prices began."

            That run-up, he said, was caused by increased beef demand, reduced supplies and closing the Canadian border due to one cow with BSE.  "Prices peaked in mid-October, reaching $110 for a common top and outside sales of $111 per cwt." 

            For 2004, tight supplies will again be a major market factor, Gill says.  "Beef production in the first half of 2004 will be down about 3% from the previous year.  For the entire year, production will likely be 2% to 3% below 2003."  In addition to reduced cattle supplies, cattle feeders will likely continue the trend of reduced carcass weights, he said.

            The reduction in available feeder cattle due to herd liquidation that began in 1996 will be reflected in prices as well, Gill said.  "A 750-lb. feeder steer averaged near $87.50 in 2003-more than $8 higher than 2002.  Prices in 2004 will remain strong throughout the year." 

            Grain production will continue to set records, he predicted.  "Corn production in 2003 was estimated at a record 10.3 billion bushels, only the second time in history that production has been above 10 billion bushels.  Production in 2004 could set another record above 10 billion bushels."  Cattlemen can expect level supplies of competing meats for 2004, Gill said, with pork production about steady compared with 2003 and poultry production showing a small increase. 

            Consumers will see little change in beef prices next year.  "Retail beef prices averaged $3.64 per pound in 2003, up about 32¢ from last year's $3.32," Gill said, explaining that an unexpected turnaround in beef demand in the U.S. starting in 2000, coupled with improving export markets and reduced imports, pushed beef prices to higher levels.  "In 2004, prices will likely remain near current levels until production increases in early spring.  Prices at that time could soften a little going into the summer and fall market." 

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