Slaughter cattle prices fall to mid-$80s

MANHATTAN, Kan. – Brisk summer beef sales at grocers’ meat counters helped push July-September average slaughter cattle prices 2 percent over year-earlier levels, but year-to-year price gains have likely gone by the wayside, said Kansas State University agricultural economist James Mintert.
“Recently, Kansas slaughter cattle prices have traded in the low to mid-$80s (per hundredweight or cwt.) after dipping to $80 in late August,” said Mintert, who is the livestock marketing specialist with K-State Research and Extension.
Records prices are gone. “But the year-to-year increases in slaughter cattle prices have come to an end. During September, slaughter steer prices averaged 6 percent below a year ago.
“This fall, prices are likely to average in the mid-$80s, about 10 percent to 11 percent below last year’s record high average as U.S. per capita beef supplies are expected to rise well above last year’s levels.”
Cattle prices notched a record high in mid-October 2003 when Kansas slaughter cattle values averaged $106/cwt. Support in prices last summer also stemmed from cattle slaughter numbers that came in well below a year earlier.
Decline in slaughters. “The slaughter decline was at least partially attributable to a slowdown in the fed cattle marketing pace,” Mintert said. “Marketings as a percentage of the (cattle) on-feed inventory fell 17 percent below a year ago during July and fell 10 percent below 2003’s during August.”
The slowdown in the marketing pace and ongoing carcass weight increases both indicate that near-term beef supplies will increase during the fall quarter, he said.
BSE is culprit. Beef exports continue to run below year-ago levels amid trade disruption linked to bovine spongiform encephalopathy (BSE) found in a cow in the United States last winter.
The decline in beef exports coupled with an increase in beef imports also will impede any year-to-year price increases any time soon, the economist said.
“The expected increase in domestic beef supplies means that slaughter cattle prices this fall will not be nearly as strong as during fall 2003,” Mintert said.
“Last year, Kansas slaughter steer prices averaged about $95 per cwt. This fall, prices are more likely to average in the mid-$80s as the increase in U.S. per capita beef supplies puts pressure on U.S. cattle prices.”
Future uncertain. Longer-term price direction is still “heavily dependent” on whether normal trade resumes with traditional trading partners such as Japan and Korea, he said, adding that prospects appear to be improving for such trade to resume in 2005.
“Even if full market access is regained, however, it will probably be difficult for the U.S. to fully regain market share lost to other suppliers, especially Australia, in the wake of last December’s BSE announcement,” Mintert said.