Released: March 15, 2002

Cattle Placements Surprising, But Prices Should Hold For Now

MANHATTAN, Kan. – U.S. cattle feeders placed a surprising 16 percent more cattle on feed in February than they did a year ago, but the jump shouldn’t keep slaughter cattle from trading in the mid-$70s-per-hundredweight area through the spring, a Kansas State University agricultural economist said.

The U.S. Department of Agriculture reported March 15 that 1.74 million head [gross placements minus other disappearance] of cattle were placed on feed in February in the United States.

"The decline in placements of cattle on feed that got under way last August came to a screeching halt during February, according to the USDA’s report," said James Mintert, livestock marketing specialist with K-State Research and Extension. "Placements last year were small, but this year’s net placements were still 6 percent above February’s five-year average."

The placements were also above what most cattle market analysts expected. The average pre-report estimate for U.S. cattle placements in February was about 6 percent above a year ago, he said.

The USDA also reported a total of 11.52 million head of cattle on feed. That was down 1.5 percent from a year earlier. Marketings of fed cattle during February totaled 1.80 million, 3 percent above 2001, but 3 percent below February’s five-year average.

The jump in placements occurred in the heavy-weight categories, Mintert said, with 700- to 799-pound placements up 28 percent compared to last year and 16 percent above the five-year average. Placements of 800-pound-or-more cattle were up 45 percent from last year and 32 percent from the five-year average for February.

Despite the mid-March drop in live cattle futures, linked to reports that several head of cattle were tested for foot-and-mouth (FMD) disease in northeast Kansas, the ag economist expects cash slaughter cattle prices to hold in the mid-$70s for several weeks. The FMD tests came up negative.

"Fed cattle supplies are still expected to tighten during the rest of March and April," he said. "As a result, cash prices are likely to trade in the mid-$70s through late April or early May."

Cash cattle in mid-March traded in the $74- to $74.50-per-cwt area in the key southern Plains area.

"The weights at which cattle feeders market their cattle will have a big impact on both beef production and prices," Mintert said.

He expects prices to begin to drop later in the spring, which should encourage cattle feeders to market cattle more quickly. Weights are likely to stay above a year ago through the spring, however.

"Placement data indicates that fed cattle marketings will start to rise by mid- to late spring which, in turn, is likely to push slaughter cattle prices back into the $60s during June," he added.

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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