Economic and Marketing INFORMATION
FOR
INDIANA
FARMERS
Prepared   by Members of the  Agricultural  Staff  of  Purdue  University,   Lafayette,   Indiana,  June   17,   1955.
What Are Prospects for Cattle?
By
M. PAUL MITCHELL, Agricultural Economics
Highlights
A SLIGHTLY higher level of buy-
ing power for the rest of 1955
on the part of consumers will not be
enough to offset the influence of
larger supplies of cattle along with
increases in pork supplies. Result—
lower prices than in 1954 for most
grades of cattle going to market during the remainder of 1955.
Although larger supplies of fed cattle are in prospect for the entire year,
some seasonal price advance for the
better grades of fed cattle can be expected in the third quarter of the
year, before the bulk of last year's
calves are ready for market as fed
yearlings. The price advance for fed
cattle experienced during the last
quarter of 1954 is not anticipated this
year. In fact, prices near the end
of the year may be below the level
of the third quarter.
Fed cattle should be marketed as
early as they can be readied after
luly and August. There appear to be
few incentives for "waiting out the
market" this year, since the latter
port of the feeding program is usually one of high cost.
The possibility of some liquidation
of cow herds and other stock cattle
remains as a potential price-depressing factor for'all beef cattle.
The higher cost of feeder cattle for
this years cattle now on feed and
prospective lower prices for finished
cattle will reduce profits from cat-
»« feeding below last year's levels.
In view of anticipated low profits
from cattle feeding for the remainder
°f this year and the feed situation in
important range states, there seems to
be no good reason for contracting the
purchase of feeder cattle early this
year, unless prices fall well below
the 20 cent level for choice grades.
Strong Demand in Prospect
Although no one has ever developed a highly sensitive meter for
measuring short time changes in demand for meat products, the most
reliable cue may be obtained from
the level of income of the American
people. Indexes of employment, business activity and the level of the
Gross National Product all show
some advances over 1954 levels,
which can be thought of as strengthening factors in the overall demand
situation.
No serious setbacks are anticipated
for the remainder of 1955. However,
if extensive or prolonged labor strikes
enter the picture during the months
ahead, demand from certain segments of our population may be
weakened. This at present appears
unlikely.
A prospective 10-20 percent increase in pork supplies over levels of
a year earlier may have some weakening effect on beef prices.
Cattle Numbers at Cyclical High
Beef cattle numbers have expanded rapidly in the past six years in
nearly all sections of the United
States. They are high in relation to
the prospective feed supply in some
areas, so further increases in numbers are unlikely. Marketings can
thus be expected to be closely in line
with production. In fact, some liquidation  of breeding herds, which
has started in recent months, may
increase. The extent of cattle liquidation, largely dependent upon unpredictable weather factors, will remain
as an important market price factor
for the summer months.
Figure 1. A downward trend in
fed cattle prices started in late
March and by mid-May brought
prices for most grades below mid-
May levels of last year. Prospects
are for lower prices than in 1954
for most grades going to market
from now on this year.
Range Feed Conditions at Low
Levels
As the result of prolonged drought
conditions in most of the 17 Western
Range States and the heavy grazing
load, feed conditions in that area
have consistently been reported at
unsatisfactory levels during the past
six months. As of May 1, the average
condition of range feed was reported
to be the poorest in 33 years. Although some improvement in moisture conditions has been reported in
distressed areas since that date,
these rains may have come too late
to help pasture and hay supplies.