ECONOMIC   INFORMATION
FOR   INDIANA   FARMERS
32
Division of Agricultural Economics
October. 1945
THE BEEF CATTLE AND LAMB FEEDING SITUATION
CATTLE
The entire beef cattle industry occupies a rather precarious position both
from the point of view of future feed supplies and price adjustment policies
in the transitional period from war to peace.
Costs of all grades of feeder cattle are above those of a year ago. Feed
lot costs in 1946 are expected to be lower under Indiana conditions than in
1945. The high level of feed prices emphasizes the need for as much margin
as possible between cost and selling price of cattle.
Demand for meats is expected to keep slaughter cattle prices at or near
maximums permitted under price controls if these are retained. If controls
are removed, price advances are expected, especially on top grades of fed
cattle. A stronger price situation is expected in the last half of 1946 than in
the early part of the year when reconversion unemployment it a larger factor.
The profitableness of cattle feeding ventures for 1946 will depend to a
very large extent upon eventual government price policies not yet formulated.
The General Cattle Situation
The beef cattle industry is in a
poor technical position at the end of
the war for two reasons. In the first
place, cattle, numbers have increased
from a prewar level of 67 million to
an estimated 82 million as the result
of favorable feed conditions and high
price levels. A return to average or
below average weather and feed conditions in the range country or in the
corn belt would lead to a forced liquidation of cattle.
The cattle price structure has been
complicated by various abnormal influences during the war period.
These include both ceiling prices and
subsidies. Although subsidies supposedly are subject to early removal,
the dependence of control measures
on subsidies is so great that it is impossible to predict the pattern for
removal of the artificial price factors.
If subsidies are removed without
compensating upward adjustments
in the price ceilings, undue financial
hardship would be imposed on all
cattle feeders. If all controls are removed from cattle prices, some upward movement of prices could be
expected, with the better grades of
cattle being benefitted most. Final
solution of the problem will depend
upon government policies which as
yet are not formulated.
For the immediate year ahead the
principal factors to be considered by
the   cattle   feeder   include:   (a)   the
high level of feeder cattle prices, (b)
feed  supplies  in  the corn  belt,   (c)
cost of gains, (d) demand conditions,
and (e) price control changes.
Feeder Cattle Prices Are High
Relative to Prices of
Slaughter Cattle
Thus far in 1945 feeder cattle
prices have remained above those of
1944, and only slightly below the record levels of 1943. Prices of feeder
cattle have reflected not only the independent strength due to very favorable range conditions, but the influence of price subsidies on finished
slaughter cattle as well. Range cattle
carry sufficient finish to invite active
bidding by slaughterers. While there
has been some decline in feeder cattle prices since early summer, any
further drop in prices seems improbable because of the prospective large
corn crop and favorable feed conditions on the range. The high level of