All signs point to higher highs, according to CattleFax’s report given during the National Cattlemen’s Beef Association’s (NCBA) Cattle Industry Convention in Orlando, FL.
It’s been since 1951 that the all cattle and calves inventory was this low. That’s 73 years! Amid a strong market in 2023, herd liquidation has continued, and signs point that a continuation of this trend is still happening. All eyes were on cow slaughter throughout the last quarter of 2023, and numbers did everything they were expected to—they continued. 2024 started the calendar year down nearly 2% from 2023’s number of beef cows, which was the lowest in 50 years at that point. On top of this, the latest inventory report showed heifers held for replacements were down 1.4% over last year as well.
It’s an easy assessment to make that we simply don’t have the cowherd to slow a strong market rally anytime soon. Factors weighing on the minds of all cattlemen and women—high interest rates, drought conditions, labor shortages, high inputs, etc.—are all playing a key role and pushing cattle to town. Raising beef cattle still hasn’t been an easy thing to do even though the market was in good shape this past summer. More relief is needed for many to pull out of their financial and atmospheric pressures. Albeit in the far West, hay prices were more favorable, which helped many producers.
The market correction that happened in the last 90 days of 2023 can be blamed for many reasons, but what is evident is that it is behind us, and this market is on the move again. Most sale barns across the country are seeing a lot of the losses nearly erased and continue to hit new highs in nearly every weight class. A couple of highlights from recent sales across the country will show that things are on the move. In Riverton, WY, 159 steers weighing 629 pounds sold for $3.04/cwt. In South Dakota, a semi load of steers weighing 705 lbs. brought $2.83/cwt. The market has seen a sharp run over the last few weeks and this trend doesn’t look to slow down in the near future. The question will be at what point does it slow down and plateau?
Mike Murphy, CattleFax chief operating officer, forecast the 2024 average fed steer price to be up $9/cwt over 2023. This is a significant increase and could mean huge dividends for WLJ’s readership this year. In his comments, he claimed the average 550-lb. steer calf will average $2.90/cwt. This is a measurable gain for cow-calf producers and is in line with what producers can budget to make ends meet, especially if an interest rate, or multiple interest rates, are against the cattle at some point, which is most producers in business today.
Randy Blach, CEO of CattleFax, commented with one of the most important details in my opinion. He spoke briefly on excess packing capacity chasing fewer numbers of cattle. As many new facilities were brought into production over the last 18 months, the added competition was bound to play a role. Even though many of these facilities play in smaller markets, with several of these facilities now in play, they are helping move the needle in the favor of the guy raising calves right now. Their impact might be small in their area, but it’s added more pressure.
What many have seen is that these facilities are going after program cattle for a specific target. Value-added programs are the most important they’ve ever been. These cattle need to have a story behind them as they enter the next phase. Feeder and stocker buyers are needing the information for risk protection and marketing. It has changed the way we look at reaching our consumer. They’ve asked for the story behind the product, and these labels help us deliver that. It’s the best our industry has right now, and producers are being paid for the story.
The outlook for 2024 is all positive for the rancher right now. I could talk more about inputs and interest rates, but we all know what they are. After the Fed’s last meeting when Chairman Jerome Powell maintained rates and looks to maintain rates for the next couple of meetings, we surely have a more optimistic outlook.
During the NCBA’s CattleCon, WLJ had a booth for the first time in recent history. In that space, we welcomed hundreds of readers from across the nation and we’d like to welcome new subscribers to the WLJ family. We are anxious for the future here and are working on several behind-the-scenes projects to build a better platform to relay the best information possible to our loyal readership. Welcome! — LOGAN IPSEN
