The fed cattle market displayed weakness in January, ending the month in the Amarillo feedlot area at $63/cwt. While down almost $3/cwt. from the December level, it was only just over $1 below a year ago.

In contrast, the feeder and calf market actually improved substantially the first month of 1998. Amarillo 600-700-lb. MF#1 feeder steers were in the $75.50-$85.50/cwt. range by mid-January.

Important USDA Data Two important USDA reports that have long-term effects on the cattle market were released in January. What they imply is important.

* Cattle And Calf Inventory The USDA National Agricultural Statistics Service's (NASS) cattle inventory figures for January 1 indicated that all cattle and calves in the U.S. totaled 99.5 million head. That's 2% below the 101.5 million head reported for January 1, 1997.

Cows and heifers that have calved were estimated at 42.9 million head, 2% below the 43.6 million head figure of a year ago. Of that total, 33.7 million head were beef cows (down 2% from 1997) and 9.19 million head were milk cows (down 1% from 1997).

These figures point toward a small decrease in the breeding herd size and a downturn in the traditional cattle cycle. Further supporting that idea was a 5% drop in numbers of beef replacement heifers being retained for breeding, and a 2% decrease in available "other heifers."

The states with the most cattle and calves were Texas, Kansas, Nebraska, California and Missouri. Leading in beef cows were Texas, Missouri, Oklahoma, Nebraska and South Dakota.

The number of beef cow operations in the U.S. last year was 882,600 - down 2% from a year earlier. The state with the largest number of such cattlemen is Texas, with 15% of the total number.

In general, beef cow operations in the U.S. are quite small - 80% have 49 head or less and another 12% have 50 to 99 head. Even in Texas, 78% of beef cattle operations have only 1 to 49 head.

NASS also estimated the 1997 calf crop to be 38.7 million head, down 3% from the 1996 crop and 4% lower than 1995. Calves born during the first half of the year were estimated at 28.5 million head, down from 1996 and 1995.

Some revisions were made in the 1997 estimates due to survey data, livestock slaughter and trade data. The revisions raised the "all cattle and calf" estimates 0.2%. That sounds insignificant but it is about 250,000 head of cattle. Either way, the latest cattle inventory is still down 2% from last year.

The other important revision was in the size of the 1996 calf crop. It was changed to 39.776 million head, or raised about 0.5% (1.9 million head). The calf crop figures are almost always revised, once at year's end and then the following year. So we can expect the 1997 total of 38.718 million head to be altered next year.

* Feeding Statistics The January 1, 1998 Cattle Feeding Report recorded 11.16 million head of cattle and calves on feed for the slaughter market in feedlots with capacities of 1,000 head or more. That was 6% above the year-ago level but down from the gains earlier in the year. Numbers of cattle and calves on feed were up more in Washington, Idaho, Oklahoma and Texas.

The on-feed inventory included 6.8 million steers and steer calves and 4.3 million heifers and heifer calves. Both of these figures were about 6% greater than a year earlier.

Fed cattle marketings in December totaled 1.75 million head - 4% above the 1996 and 4% higher than the previous month's sales. Fed cattle marketings in December recorded a larger gain in South Dakota, Colorado, Iowa, Texas and California. Projection equations now suggest that the January marketings could be even larger but probably not by much.

Placements of cattle and calves into feedlots in December only reached 1.55 million head. Down 8% below a year ago, it represents the third month of lower than year-earlier levels and the smallest placements since last June. While the total number of placements were down nationally, four states - South Dakota, Iowa, Idaho and Arizona - reported substantial increases.

Feeders placed on feed by weight groupings shifted to the heavier calves. In December, placements of cattle and calves less than 600 lbs. were 366,000 thousand, those 600-699 lbs. were 519,000, the 700- to 799-lb. category recorded 390,000 and the 800 lbs. and greater segment reached 277,000. While all these were down substantially from the month earlier, the 800 lbs. or more group was the only classification greater than the year-ago level.

Market Outlook Great For Calves It's doubtful the fed cattle market will improve much until spring. Reduced feedlot placements last fall should allow this to happen. Demand may limit the price rise but is not expected to be too restrictive.

Feeder cattle and calves have already found 1998 very encouraging. Limited feeder supplies and lower feed costs will add to the emerging increase in feedlot demand. The spring months could easily bring feeder prices considerably higher than last year. Given the good weather conditions, along with these other factors, this may well be "the year of the rancher."