01/16/07 USDA sees reduced livestock profitability

American Rancher January 16, 2007 The U.S. livestock industry is facing higher costs for feed this year. Collins: "But livestock prices still look pretty strong." The comments of USDA chief economist Keith Collins after reviewing the new department report on projected livestock prices. Collins: "We have an 85 dollar per hundredweight forecast for fed cattle in 2007. The hog price has come down and they are facing higher feed costs. But in the report we reduced our production estimate a little bit for pork in 2007 and raised the forecast hog price up to 43 dollars a hundredweight. And the poultry price has been rebounding. Broiler prices are up from the 2006 lows and so we are probably looking at a four or five cent gain per pound in broiler prices in 2007." And an 8 ½ percent increase in milk prices as well. So livestock producers will see decent prices. Collins: "Although there will be some reduced profitability." Corn is the driver of higher feed costs. USDA's final report on the 2006 crop showed a smaller crop than expected. Feed, ethanol and export demand could drop U.S. corn carryout to 752 million bushels. That compares to ending stocks this past marketing year of 1.9 billion bushels. And average corn prices could be at a record level. I'm Bob Hoff.