Angus e-List Vol. 2, 44

MANHATTAN, Kan. — Tighter beef supplies this fall should boost slaughter cattle prices into the upper $60-per-hundredweight [cwt] area, but heavy weights and other factors could temper gains, said Kansas State University (K-State) agricultural economist James Mintert.

Cattle feeders responded to last spring’s weak prices by cutting placements of cattle on feed 16% and the result will be fewer cattle coming to market this fall, said Mintert, who is a livestock marketing specialist with K-State Research and Extension.

Although fewer in number, cattle placed on feed last spring came into feedlots at heavy weights, which will keep beef supplies above a year ago for the rest of the summer. Furthermore, marketing weights remain well above last year’s levels. Dressed steer weights averaged 829 pounds in the first half of July - nearly 4% heavier than a year ago.

"And it looks like weights will remain heavy, although the year-to-year weight increase could decline to around 1% this fall," he said. "The bottom line is that beef production this summer could wind up nearly 4% larger than last year. Fall quarter beef production is expected to fall below a year ago, but only by about 2%."

Big supplies of pork and poultry vying for shoppers’ grocery dollars have also weighed on beef prices for several months, the economist said.

Mintert expects fall quarter prices to trade primarily in the high $60s versus this summer’s average in the mid-$60s, unless continued drought in key portions of the Plains sparks larger-than-expected placements on feed and more cow slaughter than forecast.

"Longer term, beef supplies should stay below this year’s level during early 2003, helping to push Kansas slaughter cattle prices into the $70s," he said. "How far prices will rise above the previous year’s level will be determined in part by weather conditions this fall and winter. Mild weather last fall and winter contributed to the industry’s weight problems this past year."

A return to more normal weather this coming year could help hold weights down, which would help lift prices, possibly setting the stage for Kansas slaughter cattle to trade in the mid-$70s this coming winter, the economist said.

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

Spring Beef Exports Rise

MANHATTAN, Kan. - Beef exports — ever a more important facet of the beef industry — rebounded this spring as beef export tonnage rose 19% above last year in April and May, said Kansas State University agricultural economist James Mintert.

The two-month surge was primarily due to a 252% increase in sales to South Korea as that country hosted the World Cup Soccer competition, he said.

"As a result, U.S. beef exports to South Korea are expected to weaken this summer as the temporary demand boost provided by the World Cup subsides," the economist said.

Beef sales to Mexico in the April-May period also jumped 40%, but sales to Japan, typically the United States’ best customer for beef, dropped 28% below a year ago as Japanese consumers continued to shy away from beef because of concerns about bovine spongiform encephalopathy [BSE], also known as Mad Cow Disease.

Economist: Feeder Cattle Prices To Rise To Low $80s This Fall

MANHATTAN, Kan. - Feeder cattle prices have fluctuated in recent weeks in line with vacillating feed grain prices, but optimism about slaughter cattle prices appears to be the dominant theme in the feeder cattle market, said Kansas State University agricultural economist James Mintert.

Despite rising corn futures in the last half of July, 700- to 800-pound steers at Dodge City averaged $78 to $79 per hundredweight [cwt] during July, up slightly from the June average, he said. And feeder cattle prices are still vulnerable to further increases in feed grain prices.

"Barring a significant runup in corn prices from late July’s $2.55 [per bushel/December futures] level, look for feeder steers to continue to trade near $80," he said. "Longer term, slaughter cattle price strength is likely to be bid into feeder prices. So, if slaughter cattle prices rise this fall as expected, feeder steer prices will likely average in the low $80s in the October-December period."