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Cattlemen Expect Bleak Days Ahead
MISSISSIPPI STATE -- Depressed cattle prices are having a similar effect on producers. As prices reach their lowest levels since January 1987, most market watchers expect little relief until the national herd size starts decreasing around 1997.
Dr. Charlie Forrest, extension agricultural economist at Mississippi State University, said prices for the best 400 to 500 pound steers averaged in the low $70s per hundredweight during May. May 1995 prices are about 20 percent below year-ago figures.
"Prices are about 36 percent lower than in April and May 1991 when they reached $110 per hundredweight," Forrest said.
The economist said on Jan. 1, the U.S. herd size was 103.3 million cows, calves, bulls and steers -- the largest herd since 1986. The national numbers are expected to continue to increase into 1997.
"High cattle numbers will have an impact on prices throughout the next several years as the increased supplies flood the market," Forrest said. "We won't be at the worst-case scenario until farmers start selling females to reduce their losses."
Forrest said low prices are not so much a reflection of poor consumer demand, but due to the large supplies of red meat and poultry. The average American consumed 65.1 pounds of beef in 1993, 67.5 pounds in 1994 and is expected to consume 68.5 pounds in 1995. Per capita consumption of all meat this year will reach 217 pounds -- another record.
Mei Mei Newsom, director of promotions and information of the Mississippi Cattle Industry Board, said beef supplies have followed the cattle numbers. Markets have the largest supplies since 1987.
"Throughout 1995, Americans will consume half a billion pounds of beef per week, which is 40 million pounds above normal," Newsom said. "We consumed 60 million pounds over the Memorial Day weekend."
Newsom said May 11 retail beef prices averaged $3.15 per pound, compared to $3.21 in 1994.
Forrest said the price spread between retail beef and farm level cattle is large historically.
"Retailers are reluctant to change prices quickly. They tend to be more gradual," Forrest said.