Increased demand will pull high beef figures through system

Beef is going to market in greater tonnage than predicted and well ahead of a year ago. But, consumers are eating it up.

That's the mid-year assessment by Scott Brown, livestock analyst with the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

In May, placements of cattle into feedlots of 1,000-head-and-over capacity were running 112% of the same time a year ago. That trend has continued all year, Brown said.

As a result, estimates on beef production for this year must continually be revised upward. The current 2000 estimate is 26.4 billion pounds or nearly one billion pounds higher than the FAPRI estimate in January.

This is the first of a series of updates on the traditional January outlook provided by FAPRI. "We are using a new quarterly model that has been developed over the past couple of years," Brown said.

"It's hard to see how we are able to continue to run such a high level of placements unless cattle inventory counts for the last couple of years have been too low," Brown added.

In spite of the growing beef supply, prices have continued strong, driven by consumer demand.

"Both 1999 and 2000 have shown more strength in demand than shown in years," Brown said. "This has resulted in prices running higher than year-earlier levels even with the added supplies of beef going to market."

Increased exports are helping prices. "Monthly beef exports have run above year-earlier levels for the first three months of the year, even at these higher prices."

In the U.S., beef consumption was 99 pounds per person last year, up 1.5%. That poundage is based on carcass weight. Consumption in the first quarter of this year was 24.3 pounds, an increase of 1.7%.

Based on the positive demand, Brown sees continued good news for beef producers for the rest of the year.

That outlook is based on a projected slowdown in production. The current FAPRI projection shows a decline of more than 3% for the last half of the year.

The drop should allow prices on the Oklahoma market for stocker cattle in the 600 to 650-pound range to average near $90 per hundredweight for the third quarter. They should go on up to $91.70 per cwt. in the last quarter.

Likewise, the outlook is good for 2001. FAPRI projects the Nebraska-direct fed-steer price will average near $73 per cwt. next year.

With that strong price, beef producers can be expected to start building the cowherd and raising more calves.

One of the big uncertainties at this point remains the strength in the consumer taste for beef, Brown said. "If that demand weakens from today's levels, cattle prices could adjust downward quickly."