B3S—Lancaster Pennine, Saturday, November 21,1911
WASHINGTON, D.C.
agricultural economy has been
facing declining prices in response
to this year’s large U.S. and world
crops.
In the next few months, however,
final provisions in the 1981 farm
bill and developments in the
general economy will modify the
marketing outlook. Hoping to
brake the price decline, the Ad
ministration has proposed a wheat
set-aride for the 1982 crop and has
opened the farmer-owned reserve
to this fall’s feed grain crops,
reports USDA’s Economic
Research Service.
With slow economic growth and
high interest rates expected to
continue through first-half 1982,
general economic conditions are
unlikely to boost agricultural
prices in the near-term. However,
economic policy, like farm policy,
depends on the outcome of the 1982
appropriations process.
Expansionary spending and tax
policies combined with tight
money and credit policies could
continue the “stop-and-go” pattern
of economic growth for some time.
The slow economy is still
squeezing livestock producers
between costs rising with inflation
and prices dampened by plentiful
supplies and slow demand. For the
year, hog prices will likely nse
about $6 over 1980’s $4O average,
reflecting a 6-percent decline in
slaughter; however, this decline m
pork supplies will not be sufficient
to raise cattle and poultry prices
from last year’s levels.
Declining livestock prices have
been a major factor behind the
continued downward revisions of
farm income estimates through
the summer. As the large crops
became apparent, crop prices
began to decline, further lowering
receipts. Current prospects
suggest that farm income in 1981
will not be substantially higher
than 1980’s low level.
Expanding U.S. crop prospects
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USDA forecasts slow farm
have accompanied declining
Soviet prospects. Further
deterioration m the Russian wheat
crop estimate and a lower foreign
- The
export estimate raised the October
estimate of U.S. wheat exports 2
million tons from September.
Similarly, a lower estimate for
Soviet feed grain production led to
upward revision of anticipated
U.S. exports, now forecast to rise 4
million tons from 1980/81 Total
U S. gram exports for 1981/82 are
expected to be 128.3 million tons,
3.1 million above last month’s
estimate.
Improved export prospects have
not raised price prospects because
the October production estimates
exceeded September’s. The corn
crop will likely reach 8.1 billion
bushels, or 205 million metric tons -
22 percent above last year’s
depressed output. The wheat crop
estimate remains at 2.7 billion
bushels, or 74.8 million tons; while
soybean production could reach 2.1
billion bushels, or 57.3 million tons.
This year’s low prices and farm
income point to slow markets for
input industries in first-half 1982,
as acreages will likely decline and
farmers will continue to postpone
equipment purchases. These
conditions could strengthen a trend
toward equipment leasing rather
than purchasing.
Lower gram prices, increased
feeder cattle movement as grazing
conditions decline, and prospects
for modest profits late in the fall
should encourage increased
feedlot placements this fall
However, fed cattle marketings
are expected to remain below
year-earlier levels through much
of the first quarter of 1982. Lower
fed cattle marketings plus nonfed
slaughter near year-ago levels are
likely to support moderately
stronger cattle prices. But to ob
tain higher prices, feeders will
have to continue holding down
>rices stable, hoi
ee
economy for start of 1982
Livestock
Cattle
Year End
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• 500 Gal. Mojonnier
slaughter weights as they have this
summer.
With total red meat and poultry
supplies rising above a year
earlier in the third quarter, meat
prices began to decline in early
October. This downward pressure
was largely due to continued
marketings from the record large
April feedlot placements.
However, most of these cattle were
marketed by late October.
The feedlot inventory on October
I was the smallest since 1967;
cattle on feed in the 23 major cattle
feeding states numbered 9 percent
below a year earlier. Net
placements during the third
quarter declined 11 percent from a
year ago, while marketings in
creased 4 percent from last
summer. Feeders indicated in
tentions to market 3 percent fewer
fed cattle than a year ago this fall.
The number of cattle in weight
groups likely to go to market in
November and December fell 4 to
II percent below last year.
Choice steer prices at Omaha
declined from near $7O per cwt in
early July to about $6l in late
October as fed cattle marketings
increased. Prices may average $65
to $6B in the fourth quarter, with
prices near $7O possibly occunng
late in the quarter. Prices are
expected to average $66 to $7O in
the winter quarter.
Feeder cattle prices at Kansas
City remain under pressure from
adequate feeder cattle supplies
and narrow feeding margins.
However, very favorable pasture
and small-grain grazing prospects
this fall plus lower grain prices
are expected to support feeder
cattle prices. Yearling feeder steer
prices increased from the low s6os
in early summer to around $66 in
September. However, prices
declined along with those for fed
cattle in early October.
Prices are expected to remain
near to slightly above fed cattle
prices this fall and winter.
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i rices up slightly
Prospects for favorable small
grain grazing this year may also
support feeder calf prices.
Commercial hog slaughter for
all of 1981 may range from 88 to 92
million head, down about 6 percent
from a year earlier but the third
largest slaughter on record. For
the year, hog prices are forecast to
average about $46 a cwt, compared
with $4O last year.
Commercial pork production m
the third quarter totaled about 3.6
billion pounds, down 4 percent
from a year earlier. During July-
September, barrow and gilt prices
at the 7 markets averaged $50.42
per cwt. In September, pork
production was 4 percent below a
year earlier, and hog prices
averaged $49.68 per cwt.
Sharply lower com prices and
only slightly lower hog prices in
September combined to produce
the best cost and returns situation
of the year for hog producers.
Hog slaughter for the fourth
quarter will come largely from
market hogs weighing 60 to 179
pounds on September 1. This in
ventory in the 14 major producing
states was down 8 percent from a
year earlier. Commercial
slaughter is forecast 7 to 9 percent
below a year earlier, with hog
prices averaging $46 to $49 per cwt.
Dairy
Commercial disappearance of
milk and dairy products (milk
equivalent, fat-solids basis) for the
first 8 months was about even with
a year earlier. Relatively small
retail price gains this fall shoud
increase disappearance. Howeyer,
the slow economy may hold the
rise in use to about 1 percent.
September 1 commercial
holdings of dairy products were
equivalent to 5.8 billion pounds of
milk, about 5 percent below a year
earlier. Anticipated large milk
production in August-October and
high interest rates this year
prevented the commercial stock
- buildup that normally occurs
during February-July.
Meanwhile, Government
holdings of dairy products (milk
equivalent basis) doubled to reach
14.7 billion pounds. Net purchases
of dairy products by the Com
modity Credit Corporation during
the October-September milk
marketing year rose 55 percent
over 1979/80 - equivalent to 12.7
billion pounds of milk.
Broilers
Broiler producers continued to
expand production in the third
quarter even though costs ex
ceeded wholesale prices. Broiler
production in the third quarter was
about 11 percent greater than in
the summer of 1980, when low
returns and hot weather reduced
output.
Chicks placed for October and
November production plus egg sets
for December production suggest
total fourth-quarter output may be
4 percent abovelast year.
Broiler prices were below year
earlier levels during the third
quarter and are likely to remain
lower again this quarter, partly
because of seasonal factors.
Although red meat supplies are
below last year, the weak economy
will likely restrain consumer
spending and hold prices down.
Eggs
Production usually rises in the
fourth quarter as demand in
creases, but this year it may trail
last year by 1 percent because the
flock is older and fewer
replacement pullets will be
available. Egg production during
the third quarter of 1981 was about
the same as 1960’s 1,432 million
dozen.
Egg production in 1982 is ex
pected to be down 1 percent from
1981 because producers have had
no financial incentive to 'add
replacement pullets.'
September egg prices in New
York averaged about 75 cents a
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(Turn to Page 839)
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