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CATTLE PRICES average._d $17.30 at U.S. farms at mid-April. Hogs averaged $20. 70. A year earlier cattle averaged $27. 70; hogs, $16.40. These data reflect the opposite price trends of the two major meat animals in the past year; cattle declined 38 per cent while hogs advanced 26 per cent. Hog prices passed the all-cattle average in February. On the basis of annual average prices, hogs had lagged below cattle since 1948. Prior to 1948, however, hogs usually averaged higher than cattle. The sharp boost in hog prices has reflected a holding back of more gilts for breeding and a more active stora~e demand by packers, as well as the smaller supply due to farmers' cutback in the number raised. It indicates that there is still a considerable demand for pork and that it enjoys some independence from beef prices. This should be especially encouraging to hog producers who have been much concerned about th~ "dead" lard market and the low level of hog prices relative to cattle prices in recent years. Some feared that there had been a large shift in de mand from pork to beef. This probably was confined to the fatter cuts of pork. THE CATTLE CYCLE has been reviewed again by a BAE expert. After examining recent slaughter reports and the six cycles in cattle numbers since 1880, he concluded that the number of cattle and calves on farms probably will not reach 100 million in the current build-up. Rather, he suggests that herds are likely to top out at about 99 million head in 1955. The big boost in cattle slaughter beginning in the second half of 1952 and continuing to the present time is expected to result in a production of about 12.6 billion pounds of beef and veal this year, for a per capita supply of 78 pounds. This would be 10 pounds more than in 1952. The peak supply on a per capita basis would be expected in 1956, estimated at about 84 pounds. Thus, the major part of the increase in beef supply from the recent build-up in cattle numbers probHOG PRICES CLIMB ABOVE THE ALL-CATTLE AVERAGE per cwt. 30.00 20.00 10.00 0 1920 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis hogs 1 40 1 50 Number 195 ably has already occurred. Nevertheless, supplies are expected to increase gradually for about_ three mote years and will provide continuing pressure on beef and cattle prices. INCREASED HOG SUPPLIES probably will begin to show up in 1954. This would provide additional competition with beef and could become an important factor in the picture. Pork supplies this year are expected to total about 62 pounds per person, 10 pounds less than in 1952, and to approximately offset the increase in beef supply. The recent drop in cattle prices has been one of the largest on record. Its sharpness is similar to that of 1930- 32 and 1920- 21, both periods of serious business recession. But sluggish business was not a factor in the recent decline. It was due primarily to the contraction in demand for breeder and feeder stock and the large increase in slaughter. The pickup in cattle slaughter in the last half of 1952 boosted the supply of beef to a level about 19 per cent above that of a year earlier. In the first quarter of 1953 production from all sources showed some further rise relative to the year-earlier volume. But slaughter has not yet halted the expansion in herds on farms. Running at an annual rate of 32 to 33 million, it is still below the estimated annual calf crop of about 35 million. A further step-up, however could halt the rise in number on farms and levei out beef supplies at about 80 - 82 pounds per capita. FEEDER CATTLE prices are high relative to fed cattle currently. This reflects the strong spring demand for cattle to go on pastures. According to the BAE, the present high ratio of feeder to slaughter steer prices will not last. Fed cattle prices may show some seasonal strength beginning in late summer, and prices of range cattle are likely to decline this summer and fall. "Prices this fall thus may repeat to some extent the situation of last fall." A heavy slaughter of range cattle is expected this fall, and there will again be the problem of moving into consumption an increased supply of beef of the commercial and good grades. Ernest T. Baughman -- Assistant Vice President