Cattle Markets Building Momentum
Cattle market direction is often difficult to determine in January of a new year. Carryover cattle sales for tax purposes may mask the true underlying direction of markets. Additionally, winter weather impacted cattle markets in late 2022 and through January 2023. For the moment, at least, winter weather impacts are decreasing, allowing feeder and fed cattle flows to normalize somewhat. There is, however, plenty of winter left and opportunities for more market disruptions in the coming weeks.
Oklahoma auction prices for feeder cattle jumped sharply last week despite larger auction volumes following weather-reduced volumes the previous two weeks. Fed prices appeared to pick up strength at the end of last week and boxed beef prices increased to the end of the week. Both fed cattle and boxed beef are poised to move higher as supply fundamentals tighten. Cull cow prices have advanced each week so far this year and are expected to continue very strong with decreased cow slaughter ahead.
Although feedlot inventories have declined since October, cattle slaughter remains higher year over year thus far for fed cattle and cull cows and bulls. Feedlots inventories should continue to tighten, and cattle slaughter should decline in the coming weeks, although continued drought conditions may slow the rate of decrease if more animals are liquidated. Beef production is expected to decrease year over year going forward as cattle slaughter drops. Steer and heifer carcass weights are currently below year ago levels, in part due to previous winter weather.
Winter weather may impact cattle markets considerably in the coming weeks and drought conditions need to be monitored continuously as we move toward spring. The general consensus of meteorologists is that La Niña conditions are likely to fade to neutral and perhaps to El Niño this year but not until the second half of the year. The remainder of winter and spring conditions may continue to be challenging as producers grapple with limited feed supplies. Early planning for the coming growing season can be useful to develop pasture/range and grazing management plans to be positioned to recover when conditions improve. Too much grazing too early may be self-defeating in terms of long-term resource recovery and ranch productivity.
