By Jamie Martin
The U.S. cattle market is experiencing unprecedented highs, as years of declining herd sizes contribute to tighter beef supplies and elevated prices.
The consistent liquidation of the beef cow herd over the past five years has significantly reduced calf crops, cattle on feed, and overall beef production, setting the stage for rising prices.
As of January 1, 2024, the number of beef cows in the U.S. was recorded at 28.22 million, a decrease from the previous year and below the last cyclical low in 2014. This reduction in herd size coincides with severe drought conditions that have accelerated liquidation rates, particularly noted in the fall of 2022.
Despite these challenges, beef demand has remained surprisingly strong, resisting the downward pressure from economic factors such as inflation and high interest rates. This robust demand has pushed choice boxed-beef values to new highs, frequently surpassing $300 per hundredweight.
Looking forward, cattle prices are expected to continue their upward trajectory, supported by favorable conditions like improving moisture levels, which enhance grazing prospects and support calf prices.
Additionally, changes in corn prices, a critical feed component, continue to influence the market, with every 10 cent per bushel change in corn prices impacting calf prices by approximately $1 per hundredweight inversely.
The USDA's recent Acreage report reflects a decrease in corn planted acreage, which could affect feed costs and subsequently cattle prices.
As market conditions evolve, cattle producers are advised to consider marketing strategies that protect against price volatility while remaining open to potential upsides, ensuring profitability in an increasingly uncertain market environment.
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Categories: National