Released: February 21, 2002
Kill Date: March 12, 2002

Cattle Prices Climb Further as Supplies Start to Tighten

MANHATTAN, Kan. – Last year’s drop in slaughter cattle prices dampened interest in placing cattle on feed, and the result is fewer cattle coming to market this winter – and a rebound in prices, a Kansas State University agricultural economist said.

"Losses on cattle marketed during 2001 led to a sharp drop in placements of cattle on feed in late summer and fall," said K-State Research and Extension livestock marketing specialist James Mintert. "January placements fell 4 percent [2.7 million head] compared to last year and cumulative net placements (placements minus other disappearance) from August, 2001 through January, 2002 fell 9 percent below the previous year."

The U.S. Department of Agriculture reported the January placement data in mid-February. It also reported a total of 11.6 million head of cattle in U.S. feedlots as of Feb. 1, which was down 3 percent from Feb. 1, 2001.

The placement cutbacks have been reflected in higher prices since late December, Mintert noted.

"Cash slaughter steer prices climbed as high as $72 during February, and averaged about $68.50 [per hundredweight] during January, up nearly 10 percent from December’s average," Mintert said.

He attributed the price recovery to higher wholesale beef prices and the perception that cattle slaughter supplies will tighten significantly as winter progresses.

Mintert expects slaughter cattle supplies to tighten the rest of the winter and spring, because of the large decline in placements during the last half of 2001.

"Weights will remain heavy, however, which will offset a portion of the anticipated fed cattle marketing decline," he added. "Nevertheless, the reduction in cattle marketings should be enough to push Kansas direct slaughter cattle prices into the mid-$70s by early March and, possibly, the upper $70s during late March and April.

He expects prices to then decline, although less than usual from spring into summer, before staging another rally in the fall.

For more information, interested persons can visit the K-State Livestock and Meat Marketing Website at http://www.agecon.ksu.edu/livestock.

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News