Feedyards still hold large numbers of cattle, but fears of a market glut have diminished through the late winter and early spring. Marketings dropped below placements during January and showed signs of slowing further during February. Part of the decline was due to cold, wet weather during January and February that hurt performance and extended the marketing dates for cattle across much of the High-Plains feeding area. Another reason is the large numbers of lightweight cattle placed last fall. Overall feedyard inventories are up, but many of last fall's placements will not reach market weights until the second quarter of this year.

According to University of Missouri Economists Glenn Grimes and Ron Plain, fed cattle marketings from the five major feeding areas during the week starting Feb. 11 totaled 199,600 head. That figure compares with 297,100 head for the previous week and 336,100 head for the same week last year.

This tightening of market-ready supplies, along with continued strong demand, has kept the fed-cattle market near the $80 mark. Boxed-beef prices during late February again climbed above $130 per hundredweight for 550- to 700-pound Choice cutout, more than $18 per hundredweight higher than one year earlier.

Feedyard placements during January totaled 2.26 million head, 2 percent above 2000 and 17 percent above 1999, largely in response to strong fed-cattle prices, long-term optimism and low grain prices. Recent widespread precipitation improved prospects for spring grazing in many areas, which should result in a reduction in feedyard placements over the next few months as more yearlings go to grass.

The price of those calves and yearlings is the primary challenge and risk for cattle feeders over the coming year. Yearling steers placed during February at 750 pounds at a cost of $85 to $87 per hundredweight will have a tough time breaking even in June at selling prices below $73 or $74 per hundredweight.

CattleFax Executive Vice President Randy Blach says it typically takes two consecutive unprofitable turns of cattle before feedyards begin driving feeder cattle prices lower.

Grain prices remain low and likely will remain low. There is, however, some risk on the upside. Corn growers face a poor outlook for profit-ability this season, particularly as the costs for fuel and fertilizer increase. We could see a significant downsizing of planted acreage this year, and if the export market recovers after last season's disappointment, corn prices could increase.

The total cattle inventory on Jan. 1, 2001, was 97.3 million head, according to the U.S. Department of Agriculture. A year-to-year decline of 1 percent marked the fifth consecutive year of declining cattle numbers. The 1999 calf crop, according to CattleFax, was the smallest since 1952. CattleFax projects prices for all classes of cattle this year will exceed those seen during 2000 with fed-cattle prices averaging about $74 to $75 per hundredweight for the year, a $5 increase over last year.