Considering current supplies of feedyard cattle, beef production and competing meats, we’ll need every bit of demand the market has to offer this fall. Through most of this year, feedyards have placed more cattle than last year and marketed them at heavier weights. During 1999 commercial beef production in the United States set an all-time record of 26.386 billion pounds. So far this year, beef production is up another 1.3 percent in spite of slaughter numbers increasing only 0.2 percent. The U.S. Department of Agriculture projects that we will finish the year with a new record for beef-production of 26.775 billion pounds, an increase of 1.5 percent over last year.

September’s Cattle on Feed report lists feedyard inventories at 10.38 million head on Sept. 1, that’s 9 percent above one year ago and 15 percent above Sept. 1, 1998.

Feedyard placements during August, at 2.39 million head, exceeded year-ago numbers only slightly but ran ahead of August marketings, listed at 2.19 million head. Placement patterns over the past six months suggest a front-end loaded market, and analysts expect large numbers of market-ready cattle to the end of this year. If slaughter weights continue to increase, we could seemore downward pressure on live-cattle prices.

Declining fed-cattle prices, expensive feeder cattle and cheap grain all contribute to slower marketings and heavier carcass weights.

With huge corn and soybean crops expected this fall, feed prices likely will trend even lower as harvest season progresses. USDA predicts combined corn and soybean supplies this fall to increase by 8 percent over last year. Farmers and grain elevators in some production areas expect to run short of bin space and will need to store grain in outdoor piles. Feeders should find excellent opportunities this fall to hedge or forward price future grain needs.

With the rapid movement of cattle into feedyards through the second half of this year, supplies of feeder cattle have tightened, and placements should slow over the next few months. If feedyards continue marketing aggressively, cattle-on-feed numbers likely will drop below year-ago levels by Jan. 1. USDA projects a significant 4.5 percent decline in beef production for 2001.

In spite of low cost of gain, feedyards have had a hard time projecting profitable closeouts on cattle purchased this fall. Corn Belt farmer-feeders purchasing cattle as a means of marketing and adding value to their grain have added further competitive pressure to the calf and feeder market. But once the market works through this fall’s supplies, a shift toward higher fed-cattle prices should return some profitability to cattle feeding.