ECONOMIC   INFORMATION
FOR   INDIANA   FARMERS
No. 38
Division of Agricultural Economics
June,  1947
THE  CATTLE  FEEDING  SITUATION
The strong demand for meats which has dominated the price situation for fat cattle during the winter and spring is expected to
continue into the fall months. Slaughter cattle marketings have been
of record proportions during 1947. Feedlot replacements also have
been unusually high during the first five months of 1947, resulting
in a substantial increase in cattle now on feed as compared with a
year earlier. Some decrease in supplies of fed cattle are in prospect
for the late summer and early autumn, which, when considered in
light of prospective shortages of other meats, makes it seem advisable
to have fed cattle marketed during this period. The high level of
feeder cattle prices at the present time shoidd discourage purchase
of cattle for strictly grazing purposes during the summer of 1947.
General Statement
This is an appraisal of the beef cattle
situation for the next six months. Crop
and feed conditions in the Corn Belt
and range territory as well as changing
economic conditions will warrant another appraisal at the start of the new
feeding year in the fall of 1947. Apparently the nation is near the peak of
the general level of prices in the postwar inflationary period. Both the timing
of the turn in prices and the severity of
the decline are difficult to predict, being partially dependent on man-made
decisions as well as normal economic
forces. General economic conditions
should be watched closely as the year
progresses. Any serious downturn in the
price level would adversely affect cattle values.
The continuation of high price levels
for meat animals is largely dependent
on full employment at high wage levels. High wage levels are practically
assured in key industries as a result of
new contracts between labor and management in recent weeks. There is less
assurance of full employment, however, because of advancing prices and
increasing inventories in mapy kinds of
industrial goods. Government purchases of meats and other foods for
relief purposes give added stability to
the markets of the U. S. until the time
production of food in other countries
increases. Although such programs are
difficult to forecast, it is expected that
food for relief purposes will continue
to be a significant demand factor for
the remainder of 1947.
Demand Conditions
Remain Strong
Despite record marketings of slaughter cattle during the past winter, prices
have been maintained at levels unheard of prior to this year. The high
level of prices for the various grades of
slaughter cattle reflects the unprecedented demand which has resulted
from full employment at record high
wage levels. Although rising prices of
most products since the end of price
controls in mid-October has reduced
the buying power of the average consumer to some degree, most people in
the U. S. have incomes well above prewar. High incomes stimulate the demand for meats and other animal products, often at the expense of less palatable foods.
Part of the unusual demand for
meats has resulted from the shortages
of many products which normally compete for the consumer's dollar. As increased quantities and varieties of industrial products become available, a
smaller share of consumer incomes will
be spent for meats and prices of livestock will likely decline. This weakening