KANSAS CITY (B)--Sales of U.S. beef to foreign buyers continue to be brisk, a key factor in recent stronger cash cattle prices, said James Mintert, agricultural economist at Kansas State University. Total beef exports so far this year, excluding beef donated to Russia, climbed 11% from 1999 levels.

Improving economic conditions have encouraged rapid export growth to South Korea and Mexico, where beef exports this year through August jumped 38% and 18%, respectively, compared with a year ago, Mintert said.

During August, the most recent data available, beef exports to all international customers were 21% larger than the same period a year ago.

Mintert says export demand could soften in 2001, particularly if cattle producers hold heifers out of the slaughter mix to begin expanding herds. If that's the case, cattle and beef prices are expected to climb. He added that there is a chance that beef exports during 2001 could fall slightly below this year's level as higher U.S. prices cause importers to seek alternative supplies.

Cash cattle prices recently climbed from the upper $60s per cwt to trade in the low $70 area in late October, and $72 recently.

What's impressive, Mintert noted, is that late-October cattle prices were $1 higher than a year earlier despite the fact that feedlot inventories were at record levels and that October beef production was 1% to 2% larger than in 1999. Price strength the rest of the fall will largely depend on the strength of beef demand and how quickly slaughter cattle weights start their seasonal decline.

Longer term, Mintert expects cattle slaughter and beef output to fall below 2000 levels, leading to slaughter cattle prices consistently above $70 during 2001 with prices in early winter predominantly in the low $70s. By March and April, however, values could rise to the mid-$70s, particularly if producers start holding back heifers and reducing cow kills.

He added that shifts in female cattle slaughter from one year to the next can have a dramatic impact on total cattle slaughter and ultimately on beef production. "This is particularly true when we are at a turning point in the cattle cycle, as we are in late 2000."

However, there has been no indication of a major downturn in heifer slaughter so far. In fact, heifer slaughter through mid-October this year was 1% larger than in the same period in 1999. Heifer slaughter is likely to remain large the rest of the fall, but should decline significantly during 2001.

"Ultimately, strength in next year's slaughter cattle market will be determined by cow-calf producers' herd expansion decisions," he said. "If producers decide to start holding back heifers and continue to reduce cow kills, the resulting slaughter reduction could be the necessary catalyst to produce cash prices in the upper $70s.

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