The year ended with light weakness in the fed-cattle market as feedlot sales stalled the final days of 1997. The average price for Choice slaughter steers in the Amarillo feedlot area was near $66/cwt. That means the yearly price average varied only $1.63/cwt. in the last three years.

In contrast to the fed market, feeder cattle gained in December and ended 1997 at $16/cwt. higher than the year earlier. While 1996 had 600- to 700-lb. MF #1 feeder steers averaging $9/cwt. less than Choice feds, this last year they recorded about a $10/cwt. premium.

A Wrap-up On 1997 Prices Though we often talk about quarterly average cattle prices, there are tremendous swings in the market each week and sometimes each day. The past year, for example, the lowest price for Choice steers in the Amarillo feedlot area was $61.82/cwt. The highest was $70. On a monthly basis, a lot of this variation was wiped out by showing only a monthly average of $63.53- 67.66.

MF #1 feeder steers at the Amarillo auction market moved from the mid-$60/cwt. in January to the mid-$80s by June. The monthly average price range, however, was only from $71.27 to $82.65. It might pay to examine at least the monthly price averages that were recorded last year in order to grasp the extent of the changes. (See Table 1).

The Cattle Outlook Examining the slaughter levels by class for 1997 will give us a feel for the longer run cattle cycle situation. The January 1 inventory statistics weren't available at presstime. For the purposes of this exercise, we'll estimate what the report will say.

Beef cow slaughter last year was down 16%. In contrast, heifer slaughter was up substantially. Both these figures suggest a reduction in total numbers in 1997. The reduced cow slaughter certainly points toward a smaller herd in 1998. In contrast, the larger heifer kill tells us little since most of these were 1996 heifers that moved into feedlots for feeding. This, therefore, does not necessarily mean fewer '97 heifer calves moving into the breeding herd.

In general, these slaughter indicators suggest inventory numbers may be up slightly on Jan. 1, 1998. For the longer run, this likely means not much change in the availability of feeder calves for the next few years. While the calf crop may be somewhat larger, the heifers will probably be held back for breeding.

In addition to my forecasts, here are some estimates from two other sources regarding the 1998 outlook.

The first is from the Texas Cattle Feeders Association (TCFA), the other from USDA. When comparing these figures, note TCFA's data and mine are for the Amarillo feedlot area while USDA statistics represent steers in Nebraska.

Cattle Feeding Increase Slows Numbers of cattle and calves on feed Dec. 1, 1997, in U.S. feedlots with capacities of 1,000 head or more, were 11.44 million head. That's 8% more than last year at this time and represents a continuation of above-year-ago levels. This increase, however, is the lowest since last April.

Fed-cattle marketings in November were 1.67 million head, down 1% from last year. This is 6% less than a month earlier. Prediction equations suggest December marketings could be about the same while January's might drop sharply.

Feedlot placements in November were down to 2.21 million head. Not only is that 6% below a year ago, but also represents the second month of such lower placements this year.

Cattle and calf placements by weight groupings in November were also down in all but the heaviest class, 800 lbs. or more. The largest decrease was recorded in the lightest class, those that weighed 600 lbs. or less. This emphasis on heavier feeders is seasonally reasonable and also suggests that feedlots are seeking shorter feeding periods.

Demand Is Still Lagging Despite a lack of oversupplies of fed beef, 1998 may have other problems. Demand is still not great. The price of Choice beef at retail in November was only $2.78/lb., 3% under the level of a year ago. The latest Hogs and Pigs Report points toward exceptionally large pork supplies for 1998, so competition will be great. While beef exports are expected to remain large again in 1998, imports of beef are also likely to be substantial.

The large feedlot placements of last summer will likely provide increased fed-cattle marketings earlier in this new year. That should temper any substantial fed-cattle price strength as 1998 begins. Conditions during the spring months, however, could be considerably different.

Less feedlot marketings due to reduced fall placements might allow a fairly good price improvement by then. If placements stay low, then the summer may also be able to retain this price strength.

Feeder cattle and calves should continue to enjoy high demand, probably even lower supplies and continued reduced feed costs. This should provide ranchers with even better price levels for calves in 1998 and keep the feeder-fed price premium up substantially.