Cattle Prices Climb, Further Gains Seen
MANHATTAN, Kan. Tightening cattle and beef supplies boosted prices in September, and a Kansas State University agricultural economist expects prices to climb further in the coming months.
"Cattle prices in the key western Kansas feedlot market at the end of September averaged $65.90 per hundredweight [cwt] for choice steers $2 higher than prices at the beginning of the month," said James Mintert, livestock market economist with K-State Research and Extension.
Smaller placements of cattle on feed last spring and summer will mean fewer cattle going to market this fall and winter. That should translate to cattle trading in the upper $60s this fall, possibly breaking through $70, depending on how large competing meat supplies are in late fall, Mintert said.
The meat industry dodged a bullet at least temporarily, when West Coast dockworkers came back to work after President Bush obtained an injunction Oct. 8 to end a labor lockout. The lockout kept more than 10,000 dockworkers off the job for 10 days at 29 ports from San Diego to Seattle and cost the U.S. economy up to $2 billion a day by holding up exports and imports, according to published reports.
The dockworkers have gone back to work under an 80-day "cooling off period."
"To understand how negative the labor dispute could be for meat and livestock prices if it recurs, it is worth examining how much product moves from the United States to the Pacific Rim," Mintert said.
During the January-July 2002 period, 57 percent of U.S. beef export tonnage was shipped to Japan and South Korea, he said. Similarly, 55 percent of U.S. pork export tonnage this year was shipped to Japan, South Korea and Hong Kong. Most of these shipments originate from West Coast ports.
"Any disruption to the flow of those products moving out of the country will have an impact," he said. "It could mean some products will be shipped from other ports at a higher cost, but in other cases, some export markets will likely be lost. If that's the case, domestic meat supplies could wind up larger, and prices lower, than projected."
Mintert said, however, that if exports continue to flow normally for the next several months, and if beef production continues to shrink this winter and next spring as expected, Kansas slaughter cattle prices should be in the low $70s during the first half of 2003.
|Seasonal Peak In Cattle Weights Is Near
MANHATTAN, Kan. In recent years the U.S. Surgeon General has warned that Americans are too heavy. So it seems, are our cattle.
"Cattle weights have been heavier than last year throughout 2002," said Kansas State University agricultural economist James Mintert. "But the percentage increases in recent weeks have been the smallest of the year."
For example, in the first half of September steer and heifer weights averaged 2.2 percent and 1.4 percent heavier than last year, respectively. In contrast, during August, steer weights were 2.9 percent heavier than last year and heifer weights were 2 percent above 2001's.
Heavy weights on market-ready cattle add more tonnage to the meat supply and drag down beef prices.
Seasonally, the economist said, weights typically peak in mid to late October, and then decline into spring. During 2001 steer weights peaked later than normal, topping out the third week of November.
"This year weights are more likely to follow the typical seasonal pattern and peak during October," he said. "As a result, weights could fall below last year by late fall."