Author: David Anderson

Amid the run to record high calf prices in recent weeks, the cow market is higher too.  Cow prices are higher on tighter supplies of cows and beef as we get closer to grilling season (it’s always grilling season for most of us down here).  

Since the beginning of the year, total cow slaughter is about 9.4 percent lower than last year.  Beef cow and dairy cow slaughter are lower than a year ago.  Dairy cow slaughter tends to be its highest early in the year before declining in Summer.  Beef cow slaughter is pretty close to the 5-year average.  You’ll notice in the attached charts that beef cow slaughter tends to pick up mid-year before hitting its peak in Fall.  

Cull cow prices tend to increase seasonally into late Spring and early Summer.  Auction prices have shown a lot of volatility bouncing between $85 and $105 per cwt over the last 4 weeks.  National average direct cutter quality cows have continued higher hitting $104.53 per cwt last week.  The boxed cow beef cutout has increased from $205 in January to $246 last week.

More impressive than the increase in cull cow prices is the increase in lean beef prices for ground beef.  The 90 percent lean boneless beef wholesale price has increased from $255 to $317 per cwt so far this year.  A real contrast has developed between the 90 percent lean and the 50 percent lean price.  Fifty percent lean prices are about 20 percent, about $26 per cwt, lower than last year.  The contrast really highlights the tight supply situation in the cow and cow-beef market and the fed cattle market.  Heavier weights are likely contributing to some relatively higher supplies of 50 percent lean beef.  We seem to have plenty of fat to go with not enough lean.  

What to Watch For

Cull cow prices should continue to increase seasonally over the next couple of months.  Cull cow prices will look attractive compared to future calf prices from her offspring.  Once grilling season gets a little closer, watch for increasing middle meat (steak) prices.  High lean beef wholesale prices and tight supplies will continue to boost beef imports.  We’ll begin to hear more about cow plants struggling to find supplies and going further and further out to buy cows and boosting bids more.  Even more stress will be put on fast food restaurant chains selling hamburgers and pressure on ground beef prices at grocery stores.   

A Note on This Friday’s Cattle on Feed Report

USDA will release its latest cattle on feed report on Friday afternoon.  Watch for placements higher than a year ago.  We are likely to see a rare event where February placements are larger than January’s placements.  Higher placements will continue to leave more cattle on feed compared to a year ago.

USDA released the annual Cattle inventory report on January 31^st.  Here are some thoughts and reactions to the report from our SAT livestock economists.

Kenny Burdine – University of Kentucky

The decrease in beef cow numbers during 2023 was very much in line with expectations – cattle supplies will remain tight. The percent decrease in heifer retention was smaller than what was estimated from 2022 to 2023, but the numbers retained was still lower. Unless there is a major drop in cow culling during 2024, it is hard to imagine the cowherd being larger in 2025. Put simply, the supply picture remains very bullish and futures markets responded positively on the day after the report.

Consistent with monthly estimates, January 1 on-feed inventory above (+1.6%) year-ago levels due to timing of placements, live cattle imports, heifers on feed, and increases in the number of days on feed in the latter part of 2023. This will likely change over the course of 2024.

I was surprised by the small increase in beef cow numbers in Kentucky. Based on cows moving through auction yards and impressions from my Extension travel, I fully expected another decrease in beef cow inventory. In fact, Kentucky was the only top 10 beef cow state that saw a year-over-year increase. Over the last few years, I have sensed a bit of a transition away from cow-calf interest and more towards backgrounding and stocker cattle. We have also lost a good deal of pasture ground to row-crops (and some to development) over the last several years, which is also relevant to the discussion.

Will Secor – University of Georgia
Georgia’s all cattle and calves inventory followed the national trend, dropping by 2% year-over-year. The number of beef replacement heifers stood out as they are down by about 5.5%, much more than the aggregate number. This is also a bigger drop than the number of beef cows that have calved (down 4%). These not only point to a lack of a turnaround, but that herd expansion may be slower as we start from an even smaller base when the rebuild does start.

Max Runge and Ken Kelley – Auburn University

Alabama’s Cattle and Calves January 1, 2024, inventory was 6.4 percent lower than January 2023. This is the fewest number of cattle in the state since 1943 and the largest percentage decrease in 20 years.  Dry weather, lower hay availability, and poor winter grazing growing conditions (record low temperatures at the end of 2022 and a dry fall in 2023) have contributed to fewer cattle on farms.  Beef cow replacement heifers were 10 percent fewer than the year before.   Alabama dairy cattle inventory remained the same as the previous year.

Hannah Baker – University of Florida

Florida numbers for beef cattle declined by 3% from 888,000 to 862,000, but we are still ranked number 9 in beef cow production as decline in the top 8 states ranged from 2%-6%, with the exception of KY. The number of replacement heifers also declined by 4% in Florida, indicating that most producers are not rebuilding yet. The start of expansion in Florida will depend on the current and future management of forage and the timing of La Niña’s appearance. With the majority of Florida producers being in cow-calf sector, the focal point will be on feeder calf prices, and they certainly have not peaked and are not expected to peak at least over the next couple of years. Additionally, the value of female cattle will continue to rise once expansion becomes reality. The open-ended question: is the national cattle herd still declining or will we start seeing stabilization in 2024? Will producers continue taking advantage of high prices instead of rebuilding? 

David Anderson – Texas A&M AgriLife Extension Service

Texas’ beef cow herd declined by 4.3 percent, to 4.115 million head.  While the national cow herd eclipsed the lows following the drought of 2010-2012 there are more cows in Texas than following that drought (4.1 million in 2024 compared to 3.9 million in 2014).  More beef heifers were held back for herd expansion than the prior year.  

Anderson, David, Kenny Burdine, William Secor, Max Runge, Ken Kelley, and Hannah Baker. “Thoughts on the Cattle Inventory Report.” Southern Ag Today 4(6.2). February 6, 2024. Permalink

After almost a full month into the new year, cattle prices and wholesale beef values are up across the board.  

Steer calf prices across the South and Southern Plains have kicked off the year higher.  Steers weighing 5-600 pounds have increased from $246 per cwt in early January to $254 nearing the end of the month.  In the Southern Plains, the same weight calves hit $300 per cwt, up from $284 to begin the year.  In both market areas, prices are 40 percent higher than they were at this time in 2023.  It’s worth remembering that prices in early 2023 had not yet experienced the sharp increase, that came mid-year, so we are comparing against a low base but, prices have advanced from December 2023.  Prices for these weight steers do tend to increase seasonally from the first of the year through March but, these price increases represent a much more than normal seasonal increase.

Heavier feeder steers across the South have increased at a more modest pace, up about 3-4 percent during January.  Higher prices buck the normal seasonal pattern of 7-800 pound steer prices that typically decline through March.  Heavy feeder prices are typically pressured by increased sales of cattle that have finished grazing wheat pasture.  

Fed cattle have climbed a few dollars, finishing last week at about $174 per cwt.  Fed cattle prices do tend to increase in the Spring seasonally, but  it’s a little early for a Spring rally.  There are about 2 percent more cattle on feed than last year, and those increased numbers may limit some price increase.  Good consumer demand in the presence of retailers who have purchased less beef for future delivery than last year could set the stage for an even better price rally.

On the beef side, the Choice beef cutout value hit over $300 per cwt last week, that’s up over $20 per cwt since the year began.  The increase appears to be led by chucks and rounds and ground beef.  

January shows a promising start for cattle prices this year.  Fewer calves, cattle, and beef production has set the stage for even higher prices later in the year. 

Preview – on Wednesday afternoon USDA will release its annual Cattle inventory report.  Next week’s SAT will focus on what stood out from the report to our livestock economists in the South.

More cattle on feed than a year ago late in 2023 was a factor in falling fed and feeder cattle prices.  USDA will release its January Cattle on Feed (COF) report on Friday.  This SAT takes a look at what we might expect in the report.

There is a group of market analysts that do COF “pre-report” estimates of their expectations for the report. Analysts pre-report estimates are published in major business outlets and industry newsletters.  These are my estimates of what I expect in the upcoming report.  

I expect December marketings to be about 99.4 percent of last year.  Marketings have been below the previous year since May and their decline has been a source of concern for some.  But, fewer cattle marketed is related to fewer cattle on feed and a slowdown in Saturday fed cattle processing by meat packers.  

My estimate for December placements is 98.0 percent of last year.  Placements typically decline sharply during the last couple months of the year and this year should be no exception.  The various data points that many analysts use offer a mixed bag of information.  The number of head sold that are used to calculate the CME feeder cattle index was about 2.5 percent lower in December compared to last year.  But, feeder cattle imports from Mexico were up about 7,000 head and the sales receipts data from USDA were up almost 14 percent. Improvements in wheat pasture conditions may have held some more feeders in the country.  Lower fed cattle futures market prices and some unprofitable closeouts for unhedged cattle may help to hold back placements.

Placements a little bit bigger than marketings means that the estimated number of cattle on feed on January 1^st remains at about 102.5 percent of last year.  More cattle on feed remain with us for the time being.  Slower marketing rates means more days on feed and likely heavier weights although, this latest winter storm may slow weight gains and reduce dressed weights. 

While the COF report is only focused on feedlots for cattle ranchers in the South, that’s where most of the calves head after weaning.  The report does give some insight into near term cattle and beef supplies and some direction for prices in coming months.

Anderson, David. “More COF Still?” Southern Ag Today 4(3.2). January 16, 2024. Permalink

USDA released its Hogs and Pigs report at the end of December.  In addition to breeding and market hog inventories and farrowing intentions for early 2024 the report includes data on pigs per litter and litters per breeding animal.  The pork industry has experienced tremendous productivity gains over the last several decades.  Among those gains are nutrition and genetics, feed efficiency, dressed weights, but also those related to the sow productivity, like litters per year and pigs per litter.  Last week’s SAT mentioned dressed weights as a source of beef production efficiency gains.  This week’s will examine pigs per litter and its contribution to production and prices for the coming year.  

In 1998, the average litter of pigs included 8.7 pigs.  A boom in productivity followed with the latest Hogs and Pigs report indicating pigs per litter at 11.7 pigs.  The rapid growth through the early 2010’s was halted by porcine epidemic diarrhea virus (PEDv) that cut pigs per litter by about 0.75 head, or 7.6 percent.  Growth began again after the worst effects of PEDv passed but at a lower plane for several years.  Pig per litter growth remained fairly flat from about 2019 through 2022 but, jumped rapidly in 2023.  A variety of disease factors combined to limit growth but as those pressures have lessened pigs per litter has spiked higher.

So, what does this mean for the hog market over the next few months?  Estimated farrow-to-finish returns have been mired in large losses for 10 of the last 12 months.  In fact, hog producers have been losing money and reducing herds worldwide for some months.  The U.S. breeding herd was estimated to be 5.999 million head, the fewest since December 1, 2014.  Farrowing intentions for the December through May period are expected to be the fewest since 2015.  But, the increase in pigs per litter is large enough to keep projected commercial hog slaughter and pork production above a year ago in 2024.  More pork production will keep the pressure on hog prices and may limit upside potential.

Anderson, David. “More Pigs.” Southern Ag Today 4(2.2). January 9, 2024. Permalink