Expert: Keeping inspectors on job could increase cattle prices
By JOHN O'CONNELL
A cattle industry expert predicts action by Congress to prevent meat inspector furloughs should help the market recover from a recent price decline.
Rancher Elmer Stanger has been waiting for cattle prices to rebound from a recent dip before selling his 100 calves.
Stanger, or Pocatello, Idaho, estimates prices of 700- to 800-pound calves have dropped $15 per hundredweight lately. But his feed and pasture are both running short, so he'll have to sell within the next three weeks.
At the Blackfoot, Idaho, cattle auction on March 22, Pingree, Idaho, rancher Terry Hone also noticed the decline.
"It's been a real good market up until the last three weeks," Hone said. "Those cattle I sold today, if I sold them four weeks ago, I could have gotten another $150 per head."
Cole Erb, proprietor of the auction, estimates feeder steer and heifer prices have dropped 20-25 cents per pound during the past two months.
"They're quite a bit depressed from what they were even a month ago. It's still a decent market, but it's not that high, high like it was last winter," Erb said.
University of Idaho Extension livestock specialist Wilson Gray said the market should improve because Congress has authorized USDA to move money from other accounts to prevent sequester-related furloughs of food safety inspectors. Many feared packing plants would have to scale back operations if the furloughs took place.
Gray's outlook is positive for cow-calf operations for much of 2013 and into 2014, due to a national herd that's as small as it's been since 1952. The market could be especially strong if the next corn crop is larger and timely moisture improves dry rangeland, he said.
Nationally, on March 1, the 10.9 million cattle and calves for slaughter in feedlots with a capacity of at least 1,000 head represented a 7 percent decline. February placements of cattle in feedlots declined 14 percent nationally from the prior year.
Stanger hasn't finished shrinking his herd to weather high feed prices. While he normally keeps about 14 head of replacement heifers, he'll keep none this year.
However, Gray believes the Pacific Northwest should receive enough moisture to support herd building this summer, and timely moisture could also lead to herd building in other regions, strengthening prices.
"We're looking at potentially near-record prices on calves. In the Northwest for this coming year, I think 500- to 600-pound calves will go between $163-$169 per hundredweight," Gray predicted. "In 2014, I expect prices to be higher, mainly because by then I think we'll see a lot of people holding back heifers to rebuild herds, and the available supply for feedlots is going to be even tighter than it is now."
Due to the combination of high feed and calf prices, Rick Stott, executive vice president of business development with Boise-based Agri Beef Co., said most feedlots have been losing $75-$250 per head. However, he's encouraged by recent news that JVS Cattle Co., the nation's largest packing plant, had its first profitable quarter in a year.
His company's strategy has been to "hunker down and know it will be better in the future."