The year 2000 was a good one for cattle feeders and the beef industry as a whole.

University of Missouri Agricultural Economists Glenn Grimes and Ron Plain point out that beef production for 2000 topped 1999 by nearly 1.5 percent. For the same period, Choice fed cattle prices were 6.4 percent higher. And, they point out, all segments of the industry shared in the price increase. Producers, they say, showed a 6.4 percent income gain, while packers gained 9.5 percent, and processors and retailers picked up an additional 6.6 percent over 1999. These gains, they note, resulted from a 6.5 percent increase in retail prices and a 12 percent jump in byproduct values. During December, cattle producers received 52.7 percent of every dollar consumers spent on beef.

As of Jan. 1, 2001, feedyard inventories topped the year-ago mark by 3 percent. Heifers and steers each posted a 3 percent year-to-year increase, the first report in some time in which heifers did not account for a larger portion of the increase. Steers accounted for 59 percent of the total Jan. 1 inventory with heifers at 41 percent. These numbers suggest that heifer placements have begun to decline reflecting producer interest in rebuilding their breeding herds. The trend likely will continue at least through this year, helping reduce the total number of cattle available to feedyards and packers.

December placements totaled 1.7 million, 3 percent above 1999 and 12 percent above 1998. Continued shortages of winter forage in many parts of the country, coupled with high fed-cattle prices and a high level of optimism, have kept feedyard buyers on the hunt for cattle to place. December placements also came in mostly on the light side with cattle weighing less than 700 pounds accounting for 60 percent of the total.

In spite of the higher prices, feedyards marketed 5 percent fewer cattle during December 2000 compared with December 1999. Adjusting for two fewer slaughter days, however, leaves the totals about equal. Shorter marketings in the face of high feedyard inventories result, in part, from the large numbers of lightweight calves placed during the second half of 2000. Most of those placements will not reach market weights until at least March. And the wide variability in rate-of-gain for calf placements will spread marketings throughout the spring and summer months, reducing the potential for a market glut at any point this spring.

Supplies of feed grains remain abundant, and with grain exports running behind projections and early indications of aggressive planting intentions this spring, feed prices look to remain low. There is some indication that high prices for nitrogen fertilizer could shift some acreage from corn to soybeans this spring, but probably not enough to alter projections for another large corn crop.

Maintaining an $80 market for fed cattle through this spring might be too much to expect, but the market does not show many signs of declining either. Feeders should see sustained high selling prices and profitability in the near term. Probably the greatest danger during times of so much optimism is pushing breakeven levels by paying too much for feeder cattle.