Kentucky’s livestock producers had a good year and likely will continue to enjoy a profitable industry into the coming year.

Cattle prices were pushed to very high levels due to U.S. borders being closed to Canadian beef because of BSE, lower U.S. supplies and lighter weights at slaughter, said Lee Meyer, University of Kentucky College of Agriculture livestock economist. Meyer was one of five UK economists who spoke during the Kentucky Agricultural Economic Outlook conference held in conjunction with the Kentucky Farm Bureau Federation’s annual convention.

Calf prices averaged more than $10 per hundredweight above 2002 prices, and incomes for many cattle producers were even more because an outstanding forage production year put more weight on many calves, he said.

“In terms of next year, production will be down about two pounds per person,” he said. “We should have slaughter cattle prices around 80-cents per pound next year – really driven on this tight supply. This will bring feeder cattle prices up somewhat more.”

Behind the scenes, but still the most important factor, is the cattle cycle. Long-term lack of profitability, especially in the West, has led to long-term erosion in the size of the U.S. cow herd. For the past several years this was offset by increases in slaughter weights. That pattern has changed, so beef supplies will be tighter in 2004 and remain so for the next few years.

With improved prices comes expansion possibilities and once expansion takes place, production will increase, supplies will rise and profits will decline.

“We can’t do anything to improve meat supplies for the next two or three years, but most likely in three or four years from now we will see an increase in production and correspondingly lower prices,” Meyer said. “When you look at that you better expand very carefully based on long-term profitability on your farm looking at key risk factors, and also look at some of the radical changes in marketing that are affecting the beef industry.”

The swine and poultry sectors of the state’s livestock industry also enjoyed a better 2003.    

Hog prices have improved this year and will end about 13 percent above 2002, Meyer said. Prices peaked about 45 cents per pound this summer. Prices would have been even higher, but Canada exported an unusually large amount of pork to the United States since their domestic market was saturated with beef.

Hog prices in 2004 likely will be similar to this year. Production is likely to expand somewhat, but if record-high wholesale beef prices hold and are passed on to consumers, pork demand may rebound.  Prices will likely be highest in the summer months and could average in the upper $40s per hundredweight.

Broiler prices recovered by a few cents per pound in 2003 moving back to the 60-cents per pound level. With steady production levels, the industry continues to build its share of the meat sector. Prices likely will average a couple cents per pound higher in the coming year.

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