Cattle Market Hits All-Time Highs: How Long Will the Bull Run Last?
Drovers 092123
Both live and feeder cattle futures hit all time highs this week as a function of historically tight supplies, reports Michelle Rook on AgDay. Yet, the question remains—how long could these strong prices last?
The last bull market, nearly ten years ago in 2014 and 2015, proved to be rather short—also a result of drought that induced widespread culling in the U.S. cattle herd. However, in this cattle cycle, the cuts prove to be even deeper, Rook notes.
Many industry and market experts agree there is an upside to 2024, as the smallest cattle inventory is yet to come.
Brad Kooima with Kooima Kooima Verilek explains: “To me, our tightest numbers have the chance to be at the end of the fourth quarter to be in the first quarter of next year. I’ll bet a steak dinner that we see the market above 200 (per cwt.) at some point in the first quarter.”
The key shift will be when cattle producers start keeping heifers instead of selling them at these high prices, which hasn’t happened yet, Rook adds.
“We’re not seeing any significant heifer retention at this point,” says Todd Wilkinson, South Dakota cattle producer and president of the National Cattlemen’s Beef Association. “The drought continues to be a problem in major cattle production areas. And, instead of us being what was a maybe a one-hit-wonder back in 2014 and 2015, I think we’re looking at four or five (years) or maybe even longer.”
Cattle producers surveyed in the Drovers State of the Beef Industry shared a sentiment of optimism for the industry. Additionally, 54% of operations shared they plan to add a family member in the next five years.
Les Shaw, a cattle producer near White Owl, S.D., notes: “Hopefully, the numbers show that we’re going to stay in a three-year cycle and we can encourage some of these young people to get their footing.”
Profitability is needed for the future of the industry because the average age of the cattle producer continues to rise, Rook adds.
Meanwhile, record cattle prices have caused beef packer margins to move into the red, according to a recent Sterling Beef Profit Tracker. Cattle feeding margins gained about $10 per head last week, closing at an estimated $343 per head. Packers saw a $51 per head decline, resulting in a loss of $10.68 per head.
Last week, cash cattle prices averaged $184.41 per cwt., up around $1.20 per head, which is 22% higher than last year’s $143.64 per cwt. cash price.
