Cash live cattle prices continue to set new weekly records in what is one of the most remarkable price starts ever to a new year. Prices the first week of the year, with the basis a five-area steer, averaged $198.93/cwt live. They averaged $202.58/cwt the following week, $203.67/cwt the next week and $209.19/cwt the week before last. In other words, they increased by $14.38/cwt in the four weeks and were likely to be steady to firm again this past week.
Several factors caused the price surge. Packers appeared to be light on their purchases despite two holiday-shortened production weeks and were forced to pay higher prices despite negative operating margins. Extremely cold weather was also a factor, as cattle feeders chose to hold back cattle to add weight back until the weather improved.
Carcass weights however set new records for steers and overall carcasses in the latest reported week ended Jan. 11. Steer weights averaged 962 pounds, up 3 lbs. on the week before and up 35 lbs. on the same week last year. Heifer weights averaged 871 lbs., down 7 lbs. from the week before but up 22 lbs. from the same week last year. Overall weights averaged 882 lbs., up 1 lb. and up 44 lbs., respectively.
Meanwhile, the latest annual Cattle inventory report was expected to show that the U.S. total cattle inventory fell slightly in 2024 from 2023 and remains the smallest total since 1951. Analysts before the report forecast a Jan. 1 total of about 86.5 million head, which would be down 0.7% to 0.8% from the 2023 total of 87.175 million head. The big difference between 1951 and this year is that beef production then totaled 8.1 billion lbs. Beef production this year is estimated to be 25.9 billion lbs. Give credit to the best beef producers in the world, says Andrew Gottschalk, HedgersEdge.com.
The report likely showed that the number of beef cows on Jan. 1 was 27.9-28.1 million head, down 0.4% to 1% on 2023. The number of beef cow replacements (heifers held back for herd rebuilding) was likely to be 4.82-4.9 million head, down 0.8% to up 0.8%, respectively. The lower number means that herd rebuilding did not begin in 2024 and that the beef industry experienced its fifth year of herd liquidation.
The higher number suggests that extremely modest expansion occurred in 2024 and might pick up pace this year if record or near record high prices for calves and feeder cattle continue. Estimates of this year’s calf crop varied from 33.250 million head to 33.056 million head. These would be down 1% and 1.6%, respectively, from the 2024 total of 33.593 million head.
On the dairy side, the report was expected to show that the number of dairy cows on Jan. 1 was about 9.4 million head, up 0.4-0.5% from 2024’s total of 9.357 million head. Dairy cow replacements likely totaled 4.070 million head, up 0.3% on 2024’s total of 4.059 million head. Steers 500 lbs. and over likely totaled 15.630 million head, down 1.0% from 2024, although one estimate was for the total to be lower at 15.552 million head (down 1.5%). Heifers, steers and bulls under 500 lbs. likely totaled 13.150 million head, down 1% from 2024.
Steer and heifer slaughter in 2024 was the only slaughter category to show a year-on-year increase. Beef cow slaughter had the largest year-on-year decline, followed by dairy cows and bulls. Examining heifer, beef cow and dairy cow slaughter as a percentage of total slaughter offers an indication of producer intentions for maintaining or growing their herds in the coming year, said USDA’s Economic Research Service (ERS) in its latest monthly Livestock, Dairy and Poultry Outlook report.
As a proportion of total slaughter, heifer and cow slaughter declined by almost two percentage points from 2023, says ERS. However, it remained the third highest share over the last 25 years. A year ago, hay prices for 2024 were expected to decline as forage supplies grew. As a result, calf prices were expected to rise to improve producers’ operating margins and support their willingness to retain heifers and cows, says ERS.
In another report, oneof the biggest lenders to U.S. agriculture identifies some of the key issues the sector will face this year. Rabobank’s Agri Commodity Markets Outlook 2025 identified what it said were some of the top-of-mind issues concerning many stakeholders in the agriculture supply chain. These include the prospect of new tariff disputes, ongoing geopolitical conflicts across the globe and a contrasting stance on climate change-related policies that could profoundly impact energy sourcing, export opportunities and overall profitability.
Tariffs threaten to compress margins for farmers, particularly those producing major grains and oilseeds, which already saw price declines in 2024, said Carlos Mera, head of Agri Commodity Markets Research at Rabobank. The Rabobank report noted that the U.S. imported $195 billion worth of agricultural products in 2023, a 280% increase over the past two decades. — Steve Kay, WLJ columnist
(Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533, Petaluma, CA, 94953; 707-765-1725. Kay’s Korner appears exclusively in WLJ.)
