The news in the beef business is centered around the foot-and-mouth disease (FMD) outbreak in England and the few cases in the mainland of Europe. But, most economists do not expect the outbreak of this disease in Europe to have much, if any, impact on U.S. cattle prices.

The outbreak of FMD disease in Argentina could have some positive impact on U.S. prices. About 15% of our beef imports in 2000 were from South and Central America. Nearly 55% of the U.S. beef imports are from Australia and New Zealand, say Glenn Grimes and Ron Plain, ag economists at the University of Missouri.

They estimate that an outbreak of FMD in the U.S. would reduce live cattle prices by 15-20% from what they would be otherwise.

"And we still see no signs that beef demand is being influenced negatively by the indicated slow down in the general economy," says Plain. "This winter’s been a boon to cash fed cattle prices, but optimism that these prices will carry over to late spring are fading fast."

Fed Prices Due To Slide

Recent reductions in both slaughter and weight have largely been the result of wintry weather throughout the Plains states. This will result in a significant increase in fed cattle marketings and cattle slaughter over the next several months.

U.S. cattle feeders placed a markedly lower number of cattle on feed and sold fewer animals during late winter, primarily because of harsh winter weather through key areas, says James Mintert, a Kansas State University agricultural economist.

Placements of cattle on feed fell 16% to 1.58 million head in February, compared with February 2000, according to the U.S. Department of Agriculture’s monthly Cattle on Feed report.

Fed cattle marketings in February tumbled 15% to 1.75 million head. Year-to-date federally inspected cattle slaughter has fallen 6.3% below a year ago. And, dressed cattle weights this year have averaged 1.2% lighter than in 2000. As a result, federally inspected beef production through mid-March 2001 fell 7.5% compared to 2000’s.

Longer term, look for slaughter cattle prices to dip into the low $70s in June. And, there’s a chance cash prices could drop below $70 this summer, if cattle weights start to rise above last year’s by late spring or early summer and the weakening U.S. economy leads to weakening beef demand.

Cash prices are expected to recover this fall into the mid to upper $70’s, according to Mintert.

For more information contact Pat Melgares, Kansas State University