Grimes and Plain Weekly Cattle Outlook

CHICAGO - Jan 4/08 - SNS -- Following is a week ending cattle market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

The 2007 broad-based energy bill has the potential to impact farm

markets and crop production decisions for years to come.

Congress' ultimate goal is for the nation to use 36 billion

gallons of renewable fuels by the year 2022. According to plans in the

bill, corn-based ethanol production will peak at 15 billion gallons

per year in 2015 and stay at that level. This will mean roughly

doubling the current corn-based production capacity.

Building that much more corn-based production facilities is not

the most challenging aspect of reaching the goal. It will be producing

enough corn to keep these plants supplied without shortchanging other

corn users such as the cattle industry and supplying acres to other

crops.

In fact, the current mid-$4.00 per bushel corn futures price is

not due to the current supply of corn based on 2007-2008 marketing

year needs, but the battle for acres with soybeans for the 2008 crop

year.

The cost of producing cattle will be impacted by the energy bill

for years to come. Feeder cattle prices will be substantially lower

with a given Fed cattle price than past history suggests. Ways of

producing more beef from forages will be a part of the management

strategy by cattle producers.

Cattle producers continue to cull the cow herd more than a year

earlier. For the year through the week ending December 15, cow

slaughter was up 6.2 percent from 12 months earlier. Cow slaughter for

the year of 2007 through the week ending December 15 was up 17.8

percent from 2005. The large cow slaughter continues to be fueled by

the drought that shortened ranges and pastures and contributed to high

hay prices.

The odds appear quite high for a relatively small reduction in

the cow herd for January 1, 2008, compared to a year earlier.

Wholesale beef prices Friday morning with Choice beef at $148.50

per cwt was down $0.12 per cwt from seven days earlier. Select beef at

$137.17 per cwt was up $1.17 per cwt from a week earlier.

The weighted average live fed cattle price for the five-market

area through Thursday at $94.58 per cwt was up $2.63 per cwt from

seven days earlier. The weighted average negotiated carcass price

through Thursday at $150.75 per cwt was up $4.35 per cwt from a week

earlier.

The Oklahoma City feeder cattle auction was closed again this

week for the New Year's Day holiday.

Slaughter this week under Federal Inspection was estimated at 528

thousand head, up 0.6 percent from a year earlier.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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