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From the time breeding decisions are made all the way to consumption, we take indicators and use them to the best of our abilities. It’s been in the works for centuries. We receive indications to make cattle bigger, so we do. We receive indications to make cattle grade better, so we do. We receive indications to make cattle more efficient, so we do.
A driving constant is change. No conditions stay the same from one day to the next, one season to the next, or one year to the next. We can all hope for ideal conditions, but as an example, look at this past year and how many acres were burned up across the West. There is no way to plan for these types of events. This was supposed to be a good year to continue the financial recovery efforts for the cow-calf producer. Livestock producers simply need several good years to make up for the past decade of scraping by. Added value in what calves have brought over the past two years has largely gone to higher inputs. I don’t want to come across ungrateful for what these calves have brought this year. We are all thankful for that, without question.
Interest rates are showing they may have hit their high point when the Fed finally cut that national rate by 50 points last month, but more cuts are needed to finally reach the producer level. Everyone is anxious to get past the election and know what is in store for the next four years. Reprieve feels like it is on the horizon.
Looking at production, the latest Cattle on Feed report showed a steady number of inventories compared to 2023. Nobody was shocked by any means, but what keeps all the predictions at bay is the simple fact that a lower cost of gain driven by cheaper feed inputs has helped feeders and packers to manage demand and price through carcass weights. All the cumulative factors have pressed together and created an interesting scenario.
With all the inputs lining themselves up for a near perfect fall for feeding cattle, the output is a result in much heavier carcass weights. In fact, steer carcass weights are up almost 28 pounds per steer head and almost 23 lbs. per heifer. This has been a trend for nearly all of 2024 which has pushed overall beef production up 1.9%. Packers have been able to slow production down with the added product each animal is providing. Just in mid-level facilities, simple math would tell us that a 700-head steer kill day would yield an additional 19,600 lbs. of carcass weight for them to process. This is huge flexibility for the packer without even getting into deeper details.
The indications are that this trend will continue throughout the rest of 2024 and into 2025. We have made these cattle bigger. We took indicators and pressure on the national cow herd and responded as cattle breeders. Think about what has happened over the past several decades. We took moderate-framed animals, added exponentially larger frames that could hold more weight, then added carcass merit and feed efficiency into their genetic makeup. We then slapped branded beef programs, value-added programs and marketing efforts across the world to them. Then to top it off, the feeding industry evolved to maximize usage, space and time and marketed this product to a vastly shrunken packing industry.
That’s a lot to get through in one column and a lot of points that could be talked about at length. Over the next few weeks, I’ll dive deeper into some of these areas and provide more data.
It’s a compliment to the people breeding cattle. They have been able to respond by changing the genetic makeup of these cattle in response to market conditions and market signals. This industry is going to be facing some crossroads in the next few years as heifer retention is now on the minds of many cattlemen. Lower hay costs and drought relief have given light to people wanting to hold back heifers again or buy replacement cows.
There are many factors at play, but the genetics in these cattle have been selected to produce the most amount of beef on the fewest number of acres possible, all while producing a high-yielding, high-grading product. It’s their efforts in producing these types of cattle that have afforded the feeder and packer the genetic flexibility in today’s market conditions. Today’s cattle have the flexibility to be maximized in a short period of time on feed or slowed down and held for more favorable conditions, all while maintaining valuable carcass merit to hit branded beef targets for more value at the consumer side. All the indications that I see tell me that we’re now producing cattle that afford the feeder and packer much more flexibility and the markets have responded with the holding pattern we’ve seen over the past 90 days. — LOGAN IPSEN
