For Immediate Release October 29, 2007
Contact: James Hunt (806) 358-3681 james@tcfa.org
2008 NOT EXPECTED TO BE A YEAR OF CHANGE
FOR CATTLE INDUSTRY
Prices for fed cattle will go up slightly in 2008, according to the prognosis offered at the 2007 Texas Cattle Feeders Association Annual Convention by Randy Blach, executive vice president of Cattle-Fax.
Blach predicted the 2008 average price would be around $92 to $94 per cwt. But, there will be volatility along the way. "I don't think you should be surprised if we sell cattle into the low dollar area into the spring, and when we're in our biggest supplies, we may very well be trading cattle in the mid-to-upper 80's.
"With feeder cattle and calf prices, they're likely to stay close to the same levels they've been at here in the last few years, too," Blach added.
Blach also advised cattlemen to expect to continue paying high prices for commodities like feed grains. Commodity prices are getting a big boost these days because the current low value of the U.S. dollar is helping drive up demand for U.S. wheat, corn and soybeans overseas, he said
"All these other markets are demanding more and more of our grains and protein supplies. That's driven by the weak dollar. My point is this: If you think we're going back to the days when we had cheaper grains and cheaper protein sources, it's not likely to happen any time soon," Blach said.
However, the weak dollar can also be an ally for cattlemen as more foreign markets for beef become open. "I would argue, if we had a level playing field, with the dollar where it is today, we may very well eclipse" the export levels projected for the next few years, Blach said.
As for the size of the beef cow herd, Blach predicted it will be "down a couple hundred thousand head" on Jan. 1, 2008 when compared to Jan. 1, 2007. However, that decline is expected to be offset by an increase in dairy cow numbers.
Meanwhile, the numbers of commercial steers and heifers headed to harvest will remain level, Blach predicted.
"For the last couple of years, we've basically been sitting here at 27.7 to 27.8 million head. We don't see that changing next year… We don't have any more of them to feed; we don't have any more of them to process. So, some of those challenges with excess capacity are going to continue," Blach said.
He also expects the trend toward heavier cattle to continue with cold carcass weights climbing by 12 to 14 pounds next year.
"We've been incentivized with cattle trading in the $90's and cost of gains in the $60's to the low $80's depending on the region of the country. We've been incentivized to make them big. I don't believe that incentive is going to go away," Blach said.
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