Economic and Marketing Information
FOR INDIANA   FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
July 31, 1964
Beef Cattle Situation as of July 1, 1964
by M. Paul Mitchell, Agricultural Economics
Liquidation of long fed
cattle during the second
quarter has set the stage for
moderate improvement in fed
cattle prices for the remainder  of  1964.
Sharp cutbacks in purchase
of replacement cattle, especially in the corn belt,
during the second quarter of
this year contribute to the
improved market prospects
late in the year.
Feeder cattle prices are
expected to continue below
last year' s levels due to the
apathy on the part of most
cattle feeders following experiences of past two years.
Any improvement in the
cattle price structure is
likely to be temporary, with
no permanent improvement in
sight until some cyclical
downward adjustments in numbers are made.
Profits from cattle feeding in the coming year must
depend chiefly on favorable
market margins, since prospective prices for fed cattle in 1965 do not offer much
hope for profit on the weight
produced in the feed lot.
Supply situation
The supply situation for fed cattle
underwent a major overhaul during
the second quarter. This came as a
result of unusually heavy marketings
of grain fed cattle and a sharp cutback in the purchase of replacement
cattle during the April-June period.
Most of the adjustment came in the
Corn Belt states, since the important
Western feeding states report a slight
increase, one percent, in cattle on
feed. A decrease of 3 percent was
reported for the nation as a whole,
with the 12 Corn Belt states down 6
percent.
The decline in numbers was not as
significant as the decline in weight of
cattle in feed lots. During most of
1963 and early 1964 the number of
heavy cattle accumulated in excessive
volume as cattle feeders apparently
tried to "ride out" the declining market. This policy only served to aggravate the bad situation by adding additional beef tonnage to the supply.
Thus, whereas the January and April
reports showed increases of 49 and 16
percent, respectively, in the number of
cattle weighing over 1,100 pounds
compared to year earlier figures, the
July situation finds a reduction of 5
percent in this classification. Combining the two heaviest weight groups,
an increase of 2 percent was reported.
These cattle will make up the bulk of
the fed cattle supply during the July-
September quarter. This supply increase should be more than offset by
improved demand arising from population growth and a moderate improvement in buying power. Prices of
choice steers at Chicago averaged
$24.32 during July-September of
1963.   With   recent   averages   near
the $23 mark, it would appear
that some further moderate price
strength can be expected in the coming weeks. Actual beef tonnage is expected to be reduced even more than
the numbers indicated, since cattle
will in all probability be marketed at
lighter weights.
Slaughter at record levels
Beef production has been increasing, with but one exception, each year
since 1958. In 1962 production fell
slightly because of a scarcity of fed
cattle which developed in the last half
of the year, allowing prices to soar
to unexpected levels. Domestic beef
production rose to 16.4 billion pounds
in 1963—a gain of more than 7
percent over the 1962 level. During the first half of 1964, there
were about 14 percent more cattle
slaughtered than in the same period
of 1963. Since slaughter weight increased, the total production of beef
showed even greater gains. It is.
thus, not surprising that slaughter
steer prices at Chicago averaged 11
percent lower during this period than
a year earlier.
Feeder cattle prices at
lower levels
After the losses incurred from feeding ventures during the past two
years, cattle feeders have been very
reluctant to refill feed lots at prices