Packers will continue to keep slaughter levels under 600,000 head per week to keep the Choice cutout above $300—why process more cattle when you lose $50 bucks per head? I’m afraid we will be in this new market for a while.
Cow-calf operators will be in the catbird seat for a while. I watched some Angus bred heifers sell recently for $1,975 per head which tells me that producers will be very cautious during herd expansion. We’ve seen some producers take advantage of this market to get out of this business. I think the average age of WLJ readers is around 63 years old. We need to create a beef industry that will attract young players.
Feeder cattle markets were a bit softer but remain very strong. The feeder cattle futures have cattle priced at $268 for next fall. I would have to imagine that those fall calves on the West Coast will be a hot item in the spring sales.
It’s been interesting watching the wildfire situation down in Texas. The major news media is thinking beef production will be even slower and there will be more price hikes. The feedyard country hasn’t been affected much, but we’ve heard about cow and calf losses, and it will take a while to get a total count on that disaster.
David Anderson, Extension economist at Texas A&M, said individual losses could mount very quickly for producers in the fire’s path, especially considering cattle values and the cost of infrastructure like fencing, according to an A&M story.
“Cattle prices continue to trend upward and set all-time records. Anderson expects that trend will continue into 2025 because the U.S. and Texas herd has shrunk over the past two years due to drought.
“Cattle values range based on factors like age and class, he said. Cull cows, which are cows aging out of calf production, and typically weigh around 1,200 pounds, were selling for $1 per pound last week. On the other end, a 500–600-pound calf was selling for more than $3 per pound.
“Calf prices continue to set records. Calves in the 500-600-pound range were averaging $2.35 per pound this time last year compared to $3.14 per pound last week.
“Spring calving season is underway, which means the wildfire could have erased the value of a productive cow and future value of any calf lost, Anderson said. ‘This was a year to make up for a heck of a lot of drought, and the cost of holding on through drought,’ he said. ‘I think there was some optimism with conditions improving and record high prices. It’s just terrible for producers who lost productive cows and potential record prices for spring calves.’
“Infrastructure losses will vary for individual producers as well, Anderson said. Damage can range considerably when considering structures, hay stocks, fences and equipment. Fencing alone costs about $3 per foot to replace.
“’How many miles of fence are in those 1 million acres that burned?’ he asked. ‘It’s going to be a big number. Then you have the loss of hay and grass for grazing. The impacts of the fires are going to be felt for a while.’”
The end of March is generally when the market turns higher going into grilling season and slaughter volume should pick up. Retailers should have many special features for middle meats, which are planned well ahead of time. The Choice cutout has been fairly stable at $305, but the 90% lean is trading at an all-time high of $310. Cull cows are getting hard to find.
There is still a lot of dry country; the Corn Belt has had a dry winter and is starting to worry about drought. The western range country seems to be in good shape, but we can always use those spring rains, so start praying for good spring moisture. — PETE CROW
