The election is nearly behind us, and I’ve had enough of the campaign ads. We should be close to knowing election results by the time you read this column; however, these national elections have a habit of lingering on, as they have for a long time. One would think that the states and counties would attempt to conform to some form of consistency in their election policies, but that’s politics, too.
Cattle markets have been on a roll the last five weeks. Packers have a bunch of holiday rib orders to fill for the holiday and ground beef is at an all-time high; packers can justify grinding chucks and rounds to fill that major market. Packers are in the black by $50 or better and have turned up processing levels to the 625,000 head range.
The Cattle on Feed (COF) report didn’t offer any surprises with cattle on feed at 100% of last year, just 4,000 head lower. Feeder cattle placed were 98.1% of a year ago and marketings were 102% of last year. We need to keep marketing on the high side for the balance of the year.
The COF report gave no signals that heifer retention has started; the number of heifers on feed is virtually unchanged from last year at 40% heifers on feed. Herd expansion is expected to start in 2026, Mother Nature still has the upper hand in this next phase of cattle production. Dry weather has been pervasive in the western states, while the eastern half of the country has had far too much rain.
The Livestock Marketing Information Center said, “The October Cattle on Feed report was a quarterly report which means NASS provides further information on the breakout of steers and heifers on feed. The report noted that of the 11.6 million head of cattle on feed, 4.6 million head (39.7%) were heifers while 7 million head (60.3%) were steers. With 39.7% of the cattle on feed being heifers, this is an indication that producers continue to place heifers into the supply chain and are not looking to rebuild the cow herd. The percentage of heifers on feed has averaged 38.8% since the October 2019 Cattle on Feed report. During the last expansionary phase in 2015, the percentage of heifers on feed fell to about 31-32%.”
So, what’s going to happen when rebuilding starts? I would expect a million and a half more heifers to be held back for breeding; I think many cattlemen will do it internally, raise their own. I think cattle folks have learned their lessons buying bred heifers for $3,500 a head, like they did in 2016. Strong calf prices should be with us for a while.
This industry has come a long way in 35 years. In the 1970-80s, beef wasn’t very good. This was what I called the genetic revolution when cattlemen tried every breed of cattle on earth in a crossbreeding system. It was a costly experiment until the industry figured out which breeds worked and where they worked best, then genetic evaluations and DNA refined the breeds of cattle used to produced high-quality beef. Over 80% of our current production grades are Choice and Prime, and consumer demand is the best it’s ever been.
Value-based marketing of fed cattle taught us the value differences between cattle. The cattle feeding segment of our industry started consolidating along with the packing industry. In the name of efficiency, feeders approached the packers with the idea of paying for fed cattle based on merit and they developed the formula value-based marketing system. Today, cow-calf producers are getting some of those premiums for producing better feeder cattle—the system has worked well for all.
Now some cattle groups have convinced the USDA that formula marketing is evil. The base price is the problem, and they feel that there isn’t enough cash trade to reflect true value for price discovery. USDA is working on a new method of determining a base price for formula cattle and I wouldn’t expect any improvements. From what I’m hearing, it would take us back to average pricing on all cattle. Is that your idea of fair with all the work you’ve done to make your cattle more marketable?
One thing I know for a fact is the less the government knows about my business, the happier I am. And don’t let the federal government mess with your market. — PETE CROW
