Cattle Herd Expansion Still Delayed

The popular CattleFax Outlook Seminar, held as part of the 2024 Cattle Industry Convention and NCBA Trade Show in Orlando, Florida, shared expert market and weather analysis today.

The smallest beef cow inventory in the last 50 years, coupled with historically strong demand, led to the highest average fed cattle and calf prices in 2023. As reduced cattle numbers and beef production continue over the next three years, leverage and profitability will continue to favor cattle producers.

Despite record prices, expansion will likely be delayed once again, according to Kevin Good, vice president of market analysis at CattleFax.

“Obviously, Mother Nature is going to be the major headwind and has been the last couple of years to expand this cow herd and, you know, it’ll happen, might take longer than we’d all like. we’ve gone through five years of liquidation, And frankly, we’re kicking the can down the road another year because of the weather that we’ve experienced the last 12 – 18 months. So, you got about 40 percent of your feedlot population as heifers and your cow slaughter, even though it’s substantially below a year ago levels, it’s still at a liquidation pace. So, we are going to liquidate in our opinion at least mildly in 2024 and then would expect that with the start rebuilding the herd as we go forward from there.” 

Good expects prices at the consumer level will need to level off for the year.

“Retail beef prices really since the turn of the century, you know, we would go back and talk about the low watermark and beef demand back in 1998, but you just go since the turn of the century, retail beef prices have averaged four and a half percent annual increase, inflation’s of about 2.2 – 2.3, so there’s more real dollars in that system and we’ve outpaced the price of pork and poultry substantially as well. But after saying that, we probably have kind of hit the end of the rope here for a minute. We’re talking retail prices for next year about 7.90. We averaged about 7.85 through the fourth quarter of 2023. So, what we’re suggesting is that prices are going to have to flatline in here for this year, and probably more than likely you’ll see pork and poultry narrow the gap just to tick, as far as that price relationship. But long term, beef demand, it bodes well.”