Steve Meyer, Paragon Economics, expects cattle slaughter to be down by about 3 to 4 percent in 2003, although the effect on pork may be minimal. Meyer says a Texas A&M study shows that the competitive relationship between beef and pork was very weak, while chicken had a much more competitive relationship with pork.

Export disruptions of last year set the stage for 2003 in the poultry sector, says Meyer. Broilers sat less eggs than the previous week for 30 weeks in a row this year, and Meyer says it is extremely rare. Chicken production may be down in 2003, which also is rare, as chicken production has grown at a pretty steady rate of about 2 percent per year for some time.

For pork, Meyer says there have only been two weeks in 2003 that have had slaughter below 2002 levels, when the December Hogs and Pigs report indicated slaughter should’ve been significantly below 2002 levels. Meyer still believes slaughter will come down and prices will react positively, with prices in 2003 expected to average slightly higher than break-even levels.

The current cycle is one of the longest cattle cycles on record, as this is the seventh straight year of liquidation, says Meyer. Meyer notes that cow-calf producers have been profitable, which generally triggers an expansion. He notes beef production could go either way in 2003, a continued liquidation or the start of an expansion.

This year may be the first time since 1972 production for pork, beef and poultry have all been down, according to Meyer.