The result has been a boon to cash cattle prices, but the effect may soon fade.

Placements of cattle on feed fell 16 percent to 1.58 million head in February, compared with February 2000, according to the U.S. Department of Agriculture’s monthly Cattle on Feed Report. The data, issued March 16, took into account feedlots with capacities of 1,000 head or more in the 50 states.

Similarly, fed cattle marketings in February tumbled 15 percent to 1.75 million head.

The combination of smaller marketings and placements meant that the March U.S. cattle on feed inventory, similar to a month ago, was still 11.70 million head, 3.2 percent above 2000’s and 12.2 percent larger than the five-year average.

Year-to-date federally inspected cattle slaughter has fallen 6.3 percent below a year ago, said Mintert, who is a livestock marketing specialist with K-State Research and Extension. And dressed cattle weights this year have averaged 1.2 percent lighter than in 2000. As a result, federally inspected beef production through mid-March 2001 fell 7.5 percent compared to 2000’s.

"But the reduction in both slaughter and weight has largely been the result of wintery weather throughout the Plains states," Mintert said. "That means fed cattle marketings and cattle slaughter will increase significantly over the next several months."

Over the last five years the rise in cattle slaughter from mid-March to late spring has averaged about 10 percent, he said. There is a good chance this year’s slaughter increase will be larger than normal as cattle feeders struggle to get their marketings back on track.

"The most positive news on the report was the dramatic decline in placements of heavy weight cattle on feed," Mintert said. "The USDA reported that placements of cattle weighing over 800 pounds fell 132,000 head [-28.9 percent] in February compared to a year ago. That will help offset some of the expected increase in marketings in late spring and early summer arising from this winter’s cold, wet weather."

Western Kansas slaughter cattle prices have been above $80 per hundredweight [cwt] since late February. Most of the increase in cattle and beef prices this winter occurred because of the shortfall in cattle slaughter and beef production, not because of a dramatic increase in consumer demand for beef, the economist said. For example, through mid-March western Kansas slaughter steer prices were 14 percent higher than in 2000, an increase close to the magnitude expected as a result of the 7.5 percent reduction in beef production.

"It’s too soon to tell definitively how much impact the weakening U.S. economy is having on domestic beef demand, but the preliminary data suggests that year-to-year demand increases experienced in both 1999 and 2000 could be slowing down," Mintert said. "Export demand is also uncertain as it’s unclear what impact, if any, the recent foot-and-mouth disease outbreak in the United Kingdom will have on U.S. beef trade. It’s unlikely the U.S. will have an opportunity to significantly increase beef exports to the European Union, given the EU’s restriction on importing beef that has received hormone implants."

Cattle slaughter started to increase the week ending March 17 and, at the same time, boxed beef cutout values dropped below $130 per cwt. As a result, Mintert said Western Kansas slaughter steer and heifer prices are likely to dip into the upper $70s the next several weeks, unless more winter weather further hampers cattle performance and restricts supplies.

"Longer term, look for slaughter cattle prices to dip into the low $70s during June. And there is a chance cash prices could drop below $70 this summer, if cattle weights start to rise above last year’s level by late spring or early summer and the weakening U.S. economy leads to weakening beef demand. Cash slaughter cattle prices are expected to recover this fall into the mid to upper $70’s," Mintert said.