Record Prices Highlight 2005

Fed cattle prices predicted to range from $85 to $95 per cwt. in the first quarter of 2006; $84 to $92 in the second; $80 to $88 in the third; and $86 to $93 in the fourth.

Published on: Dec 20, 2005

Fed cattle prices averaged almost $87.50 per cwt. in 2005, the highest yearly average ever recorded in the Texas Cattle Feeders Association area. And, according to Jim Gill, TCFA market director, continued strong beef demand in the U.S. combined with reopening Pacific Rim markets should keep fed cattle prices strong in 2006.

Speaking at the annual TCFA year-end news conference recently in Amarillo, Gill predicted that fed cattle prices will range from $85 to $95 per cwt. in the first quarter of 2006; $84 to $92 in the second; $80 to $88 in the third; and $86 to $93 in the fourth.

Tight feeder cattle supplies caused by the industry finally entering the expansion phase of the cattle cycle helped bolster prices in 2005 and will continue to keep beef supplies tight in 2006, Gill says. That will put a strong underpinning on feeder cattle prices. Gill says a 750-lb. feeder steer averaged about $111 per cwt. in 2005—more than $7 higher than 2004 and $25 higher than 2003. "Cheaper corn prices combined with tighter feeder supplies will likely support high feeder prices for the next couple of years," he predicts.

"Corn prices, which averaged nearly $4.45 per cwt. in 2005, fob the elevator, will likely remain on the defensive in 2006," Gill says, as corn production continues at a strong pace. While the grain complex will see increased demand from exports and ethanol, corn supplies will be more than adequate in 2006, coming off a record 11.8 billion-bushel 2005 harvest.

Consumers should see steady retail beef prices in 2006, Gill predicted, even with tight cattle supplies and increased demand both domestically and from export markets. Beef production in 2006 should be 3% to 4% higher than 2005, due mainly to the prediction that average carcass weights will continue to be heavy next year, with the 2006 average close to the 2005 record of 814 pounds. Higher beef production coupled with an expected 3% increase in poultry production and a 2% increase in pork should ensure adequate protein supplies in 2006.