Despite concerns over a slow growth economy and abundant media attention given to cattle diseases in Europe, cattle prices have had a good year so far, notes Chris Hurt, Extension Economist, Purdue University. Through the first third of the year, he says, choice cattle prices have averaged $79.20 compared with about $70 for the same period last year.

The primary reason for such a strong market price has been a more than 7 percent reduction in beef supplies, with 6 percent fewer head coming to market and 1 percent lower market weights. Retail consumers have felt the impact of higher retail prices, but so far have not backed down from enjoying their beef, Dr. Hurt notes. Retail prices in the first quarter were at record high levels of $3.30 per pound, compared with $2.95 during the first quarter of last year and a 2000 yearly average of $3.06.

Concerns about a slow growth economy and some reduction in consumer confidence seems to have had only small impacts on beef consumption. Dr. Hurt notes that employment levels are still high at 4.3 percent, and most consumers still have strong buying power. Also the issue of foot-and-mouth disease (FMD) has likely been somewhat positive for U.S. producers. While most of the media attention has been given to FMD in Europe, the U.S. has not been importing any beef from Europe since the outbreak of Mad Cow Disease.

The larger uncertainties in the U.S. have been whether the media attention given to Mad Cow and FMD would have negative impacts on meat consumption here. Thankfully for beef producers, the answer seems to suggest that U.S. consumption, in general, has not been negatively impact, and that consumers have correctly received the message that the problem is "over there."

Dr. Hurt expects that cattle prices will be influenced by continued short supplies for the remainder of 2001. However, Choice steer prices will likely weaken from their spring highs near $80s. Typically, prices weaken from mid﷓April through most of the summer. This means that Choice steer prices could drop to the low $70 by the end of the summer. However, anticipated economic recovery in the last﷓half of the year and a 6 percent reduction in supplies in the final quarter of the year should bring a return of strong cattle prices, with prospects for steers to return to the mid﷓to﷓high $70s.

At this point in the year, the cattle market has demonstrated an ability to shrug off the slow growth economy, as well as Mad Cow and FMD in Europe. Each of these were large uncertainties. With a potential for an improving economy in the second﷓half of the year and no evidence of loss of U.S. consumer demand from media accounts of Mad Cow and FMD, the rest of the year appears to be bright for the cattle industry.