Remember all those lightweight cattle that feedyards placed last fall and into the winter? It took some time, but they have begun to finish and ship to packers, influencing slaughter numbers, beef supplies and market prices.

Feedyard placements and total inventories continue to drop off, but heavy front-end supplies could push fed-cattle prices considerably lower this summer. Iowa State University Agricultural Economist John Lawrence says that through most of 2000 cattle and beef prices increased even as supplies increased. By the end of 2000 and into this year, beef production dropped off, helping support continued higher prices. During the first quarter of 2001, Dr. Lawrence notes, cattle prices averaged 13.5 percent higher than one year earlier, but much of the increase relates to a 6.7 percent decline in supplies. This relationship, in which each 1 percent decrease in beef production influences about a 2 percent increase in prices, is typical for a period of normal beef demand, he says.

These trends suggest that as slaughter numbers and beef supplies increase, we can expect some decline in prices, rather than increases like we saw last year. But while numbers of market-ready cattle likely will increase through the summer, longer-term trends suggest continued declines in production and generally strong fed-cattle prices through this year and 2002.

The U.S. Department of Agriculture Cattle on Feed Report from May 18 lists April placements at 1.55 million head, 9 percent below April 2000. Feedyard marketings during April totaled 1.82 million head, which fell 3 percent below 2000, but beat the month's placements by 270,000 head. USDA pegs on-feed inventories at 11.2 million head for 1,000-head and larger feedyards as of May 1, which is 2 percent higher than the same date last year. April was the third consecutive month in which feedyard marketings exceeded placements. The trend is likely to continue with on-feed numbers dropping below year-ago levels in the second half of 2001.

Boxed-beef prices and packer margins remain strong, grain prices are low and feedyard performance continues to improve as the weather becomes more favorable. Fed-cattle prices dropping to the $70 to $72 range this summer could make it difficult for feeders to do better than break even on some pens that they placed at high prices. But if feedyards stay current in their marketings, and beef demand remains strong, prices should rebound significantly during the fourth quarter of this year.

Meanwhile, the Livestock Marketing Information Center reports that cow slaughter totaled 1.9 million head during the first four months of 2001, about 8 percent more than during the same period last year. The report notes that increased cow slaughter suggests that producers carried a significant number of nonproductive beef cows over from 2000, which were included in the Jan. 1 USDA cattle inventory. If so, the 2001 calf crop could turn out to be lower than projections, especially considering the unfavorable weather many ranchers faced this spring during calving.