Good news for wheat and cattle producers: Market prices for both commodities are expected to remain strong throughout the remainder of the year, according to a Texas Cooperative Extension economist.

"The good news for wheat producers is fewer U.S. ending stocks and a lower predicted carryover," said Steve Amosson, Extension economist-management based at Amarillo, speaking at a recent beef and forage meeting here. "Actual planted acres and yields turned out lower than USDA's expectations.

"That means the national average wheat price this year is expected to be around $3.50 per bushel, about 10 cents higher than current cash prices."

The bad news is domestic food use of wheat has declined during the last five years, due in part to the current low-carb diet craze. At the same time, the amount of wheat for food use seems to have stablized this year.
The United States accounts for only about 12 percent of the global wheat crop, an arena where the European Union, the former Soviet union, China and India are the top wheat producers.

"Forty to 50 percent of the U.S. crop goes into the export market. There are indications that foreign wheat production is up this year, which could dampen U.S. exports," Amosson said. "That's why it's important to pay attention to global and domestic planting intentions, and to keep an eye on the export market at all times."
Cattle producers should see strong market prices for the next two to three years, he said.

"A smaller U.S. cattle inventory, strong domestic demand and the reopening of export markets in Japan and Korea will add strength to the cattle market," Amosson said.

"But the picture is not all upbeat. Cheaper corn prices are leading to heavier carcass weights, resulting in more beef on the market. And if the Canadian market opens, there are indications that significant imports of fed beef and feeder cattle could occur.

"Extension economist Ernie Davis is now projecting 2005 cattle prices of $83 to $87 per hundredweight for fed cattle, $88 to $94 per hundredweight for 700- to 800-pound feeder cattle and $102 to $112 for
500- to 600-pound feeder cattle."

Even with strong prices predicted through 2005, Amosson reminded stocker cattle operators that advance pricing in January – through futures or forward contracts – holds more profit potential than selling stockers right off of winter pasture in March.

"Remember also that it's hard to justify grazing out a wheat crop when the market price is standing at $3-plus per bushel. With that kind of grain price, it's hard to make graze-out pay," he said. "It is wise to know your break-even points, evaluate the graze-out option carefully and consider some form of price protection.

"But be cautious about how and when you lock in a price. Know the seasonality of your market."

Extension's market outlook for livestock and crops is available online
at: http://agecoext.tamu.edu/outlook/list.htm.

Information on farm policy, crop insurance, commodity budgets and marketing programs is available at: http://agecoext.tamu.edu.