Cattle markets were boring last week as feeders and packers dug in for higher values on fed cattle. Some trade developed Wednesday; about 43,000 head traded at a weighted average price of $141.75 live and $227.02 dressed, which was lower.
Formula cattle were fetching $232.25 with an average carcass weight of 869 pounds. The quality of cattle traded didn’t appear too high. Packers want the better cattle that will grade Choice or better, and they are getting them in the northern feedlots—imagine that. Texas cattle traded Tuesday at $136.
I suppose we are in the dog days of summer, and as hot as it has been, I’m sure nobody is interested in cranking up a hot grill. This has traditionally been the toughest time of the year to sell beef, but ironically, packers were expected to run 668,000 head of cattle last week.
The Cattle Inventory and Cattle on Feed reports are coming out soon, and we expect them to tell us the nation’s cow herd is smaller than it was in January. Most analysts are pegging the Cattle on Feed report at just 0.1 percent over last July, which I would call manageable.
Placements were expected to be down 5.3 percent, with marketings 2 percent higher than a year ago. Beef demand remains strong. The export market has added over a billion dollars in sales to the beef industry so far this year. A strong dollar hasn’t slowed this market down.
The midyear Cattle Inventory report will give us the big picture on future beef production, which should be lower in 2023. This year will show huge beef production with all of the cows going to market because of the drought. So many cows have been going to market in the past few weeks that cull cow and bull prices have dropped significantly from two weeks ago. Cows in the southeast part of the country are struggling in the $70 range, while West Coast cows are still trading as high as a dollar.
The Daily Livestock Report estimated that total cattle numbers will be down 2.1 percent to 98.683 million head. All cows and heifers that have calved are estimated to be 2.6 percent lower to 39.739 head, with beef cows and heifers along with dairy cows and heifers expected to be 3 percent lower on cows and 1.2 percent lower on heifers. Estimates are for 30.4 million beef cows and 9.4 million dairy cows.
The national cow herd continues to shrink and will certainly boost the markets. For perspective, after the last big drought in 2015, total cattle numbers shrank to 89.1 million head, and the midyear report is suggesting we will be down to 98.7 million head. In this last cattle cycle in 2018, the number of beef cows that had calved was 41.8 million head. This recent report is estimating we will be down to 39.9 million head, so there will be 1.9 million fewer feeder cattle available.
It’s looking like the next few weeks will be choppy in the fed cattle markets—packers appear to have plenty of cattle around them. The Labor Day market usually signals the fall rally in beef and cattle prices. The deferred live cattle futures markets are stronger in the fall, so there is room to grow and see stronger fed cattle prices. The first quarter of 2023 should be a very strong market for fed cattle.
Feeder cattle markets will follow fed cattle prices, as they always do. Corn markets are in decline and currently trading at $5.75 a bushel, which is positive for feeder cattle markets. The cost of gain on new placements is estimated to be $1.32 a pound; cattle coming out of the feedlot endured a cost of gain at $1.44 per pound. Breakevens on fed cattle, according to the Cattle Report, are showing a $150 loss per head on average cattle. Better quality feeder cattle with attributes do not apply to these calculations.
Cattle feeders have been paying top dollar for cattle marketed with a program like Verified Natural, Global Animal Partnership certified, non-hormone treated cattle, better genetics, etc. The list of marketing options goes on and on; there are lots of programs you can market under. Cattle feeders want cattle that are healthy, grow fast and grade. They know where they are and how your cattle perform. It pays to be a reputation feeder cattle producer, just like the reputation seedstock producers. There is a good future for the beef industry. But we need to keep on praying for rain—it will come. — PETE CROW
