031234 Economist Sees Cattle Price Dip

Bozeman, MT - Cattle prices could take a drop next year, despite other signs that they will remain strong for at least two years, a Montana State University economist said.

The key factor will be whether Canadian producers regain the market share they lost this year after a mad cow disease scare that closed the U.S. border to their beef, John Marsh said. With a Canadian comeback, he said cattle prices could fall by about $5.80 per hundredweight by next December.

Cattle and wholesale beef prices increased about 58% this fall, compared to a 26% rise in fall 2002, Marsh said. However, retail prices didn't keep up and increased by only about 20%, meaning more of a squeeze on grocers' beef margins.

Marsh said research showed most of this year's higher prices stemmed from a smaller supply of cattle, reduced slaughter weights and the closed Canadian border. An increased domestic demand and higher value of beef byproducts, such as hide, also contributed.

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