Cattle producers are coming off a year of record high prices in 2023. But with an even smaller herd in 2024 and the smallest in 73 years, will cattle prices hit new highs again in 2024? CattleFax, releasing their projection here at Cattle Con 24.
Kevin Good, with CattleFax says the USDA Semi-Annual Cattle Inventory Report showed the herd is still shrinking and producers are not in the rebuilding phase. He says about a third of the cow herd was in dry or drought conditions in 2023 and the cow slaughter shows there is still some liquidation taking place.
He says, “Last year the culling rate was less than 2022 but it’s still over 12%. So that needs to get closer to 9% before we can say that we’re starting to expand on the cow side. And then on the heifer side we still have a pile of heifers on feed. In fact, 40% of the on feed population is heifers, that number needs to be closer to 34%, 35% before we can truly say we’re expanding on the heifer side too.”
So what does that mean for their price projections for 2024? Good says they are expecting record prices again this year for fed cattle. “Fed prices you know we look at them this past year in 2023 we averaged $175. We’re suggesting we’ll average $184-$185 this year. So about a dime higher. And really, it’s a function of tighter supplies, still strong demand although we’re just a little bit nervous about demand because of our price point compared to pork and poultry. and then continued stronger leverage because we’ve got tighter supplies.”
Good says they are also predicting a record feeder cattle market in the coming year. “We would suggest $240 to $250 on an eight weight is where we’ll end up this year. So, substantially higher than last year. And so obviously as all prices move higher the margin the system particularly for a feeder and then a stocker operator probably going to be a little tighter this year than last year because the calf market is going to go up the most.”
However, the higher prices for replacement animals will further squeeze break evens, which Good says have already been tested. “As we speak you have a lot of cattle on feed for the first quarter that have break evens above $190 to $195 that were bought betting on the come as we came into this year. Those cattle most likely will lose some money. Cattle that are being placed today to go against this summer at a $180 to $185 is their breakeven and as we suggested that’s where we think the average price is going to be this year. So feedyards paid a lot of money on average, this year it’s going to be a thinner margin.”
One positive is feed prices have moderated with a record corn crop and lower prices than a year ago Good says, “We’ve got corn going into the bunk today that’s $2 cheaper than it would have been 12 to 18 months ago and so that’s $140 to $150 a head less cost because of grain values.”
Good also says this cattle cycle will have a longer tail that those in the past, especially 2014-15.
“There’s a lot of things that are different from 2014-15. That cycle we turned on a dime we had good moisture, high prices and so we did expand very quickly. We don’t see that taking place this time. We see slower expansion so supplies will stay tighter longer as we go through the next three or four years. Also, during that timeframe if you remember back to 2010 and 2015, we lost quite a few packing plants, right now we’re starting to build more packing plants so the leverage component will continue to favor the cattle producer longer in this cycle. You know tightest supplies are still three years in front of us and so we would suggest that prices stay strong through that long and even longer.”
