Heifer Liquidation Supports Beef Production

April 25, 2000

USDA says beef production will continue record large at least through summer, but historically large numbers of heifers on feed and heifer slaughter likely will decline sharply this fall as more heifers are retained for breeding. Fed cattle prices should be back in the low $70s this fall, while feeder cattle prices likely will remain in the mid-$80s per cwt for much of the year.

"Improving moisture conditions are aiding spring pasture development following an unusually dry fall-winter season," says the report, "and March feedlot placements declined 1% from very large placements in 1999. As long as crop planting and grazing conditions remain fairly favorable, placements well into next year are expected to remain below year earlier levels, reflecting the declining cattle inventory."

For consumers, prices this year likely will return to more typical levels of 1999 and average in the upper $2.90s per pound. Prices for retail choice beef declined to the mid-$2.90s in January-February with first-quarter per capita beef consumption increasing more than a pound from both 1998 and 1999. This fall, retail prices should increase to more than $3 per pound. Per capita beef consumption will decline from the peak in 1999 following the decline in beef production.

Beef prices are in a position to remain high for "multiple reasons," says the report. Both hotel-restaurant and export demand for high-quality beef appear very strong and will be enhanced by economic growth resurgence in Asia.

The entire report is included in the May issue of Agricultural Outlook and is available on the Internet.