![]() ![]() Hay stocks are critical for winter feeding, when pastures go dormant. Hay production and stock levels in the US during 2022 were at their weakest level in 40 years. Gro's Beef Cattle Feed Index, part of the Gro Custom Price Index application, shows that feed costs are still hovering near the highs of early 2022, with hay prices 68% over last year’s levels at this time, further showing the impact to producers’ bottom line decisions in thinning the cattle herd. Having fewer cattle also puts buyers into a bidding war for head counts for harvest throughput needs. While a drop in feed input costs could help keep a lid on cattle and beef prices, it is unlikely that a drop in feed prices could dramatically shift the supply constraints that underpin our projections, given the lead time to add cows back into cow-calf operations and then initiate the calving cycle. The reduction in headcounts for the second half of this year are expected to be stronger than beginning inventory reductions. The latest cattle on feed numbers show a 4% year-over-year decline, which will guarantee less beef availability in the second quarter when they come off of feed and head to late spring harvest for the kick off to summer meat sales. Based on animal life cycle timelines, beginning cattle inventory of 2024 will likely fall below 2014 and to the lowest US inventory since the 1950s, with 2025 inventories to show limited improvement, if any.īeginning 2023 inventory for all US cattle is recorded at 89.3 million, down 3% from 2022, a net loss of nearly 3 million head, indicating that supplies are truly in contraction. The low inventory numbers of 2014 were led by the cow slaughter acceleration that happened in 2011 (exacerbated by the drought in 2012), demonstrating the lag before the inventory cycle lows can be in place. It could also mean that elevated beef prices prevail into 2025 because of the life cycle of cow-calf operations to generate the marketing herd cow gestation cycles take roughly nine months. Such a move would mean a lower cattle inventory and reduced slaughter counts well into next year. The current levels of cow slaughter set up the US calf crop potential, which is already set to be on a par with 2015 levels, to possibly fall below 2014. Back then, in response to the supply crunch, beef prices from 2011 continued to climb through 2012 into the inventory lows of 2014, a direct result of the cow herd liquidation and the reduction in calving ability that resulted. During 2022’s second half, cow slaughter represented 12% of total cattle slaughter, effectively liquidating the breeding herd in the same fashion as 2011. Prices for the choice beef cutout, a proxy for US beef prices, are currently averaging just under $280/cwt, on a par with last January as well as average prices for 2022.įor much of last year, choice beef cutout prices mildly declined when ranchers liquidated their inventories as pasture land in Western states dried up and as cattle feed costs stayed at elevated levels.įrom July-Dec 2022, US cow slaughter, which reflects female cattle raised as breeding stock, rose 7% compared with the same period in 2021, marking the largest cow slaughter since 2011. Price target for 2023 is circled, as a likely range should beef demand hold strong. The dotted line represents the demand curve, or the trend of the past 18 years of beef consumptive demand. If 2023 beef demand continues at the recent pace, then decreasing beef availability could push prices (y-axis) to new records. Increasing beef demand in 2020, 2021, and 2022, as represented in pounds of per capita consumption (x-axis), has shifted what US consumers are willing to pay for beef. A dwindling herd is signaling that US beef prices are about to return to the records held through 2021, a year when wholesale beef averaged above $280/cwt.Īdditionally, as heightened demand has increased what consumers are willing to pay for beef, supply constraints could lift prices even higher (see the chart below). ![]() Heightened beef demand, the US’ shrinking cattle herd, and drought-related feed input cost pressures point to a tightening in US beef supplies and elevated prices into 2025, a new Gro analysis shows. To see how you can become a premium Gro user, please schedule a demo with our team here. This Insight article was sent to premium Gro users on Wednesday, February 1. ![]()
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