High grain prices may keep cattle prices level

Prices for fed cattle will go up slightly in 2008, according to the prognosis offered at the 2007 Texas Cattle Feeders Association Annual Convention by Randy Blach, executive vice president of Cattle-Fax.

Blach predicted the 2008 average price would be around $92 to $94 per cwt, but there will be volatility along the way.

"I don't think you should be surprised if we sell cattle into the low dollar area into the spring, and when we're in our biggest supplies, we may very well be trading cattle in the midto upper 80s. With feeder cattle and calf prices, they're likely to stay close to the same levels they've been at here in the last few years, too," Blach said.

He also advised cattle producers to expect to continue paying high prices for commodities like feed grains. Commodity prices are getting a big boost these days because the current low value of the U.S. dollar is helping drive up demand for U.S. wheat, corn and soybeans overseas, he said.

"All these other markets are demanding more and more of our grains and protein supplies. That's driven by the weak dollar. … If you think we're going back to the days when we had cheaper grains and cheaper protein sources, it's not likely to happen any time soon," Blach said.

However, the weak dollar can also be an ally for cattle producers as more foreign markets for beef become open.

"I would argue, if we had a level playing field, with the dollar where it is today, we may very well eclipse" the export levels projected for the next few years, Blach said.

Meanwhile, the numbers of commercial steers and heifers headed to harvest will remain level, Blach predicted. He also expects the trend toward heavier cattle to continue with cold carcass weights climbing by 12 to 14 pounds next year.