The cards might be in the island nation’s favor as well. Weaber says compared to last year, beef exports by tonnage are down nearly 14% year-to-date as of the start of fall.Īustralia offers stiff competition to the U.S., which was aggressively building herd numbers and the U.S. beef exports picked up over the last several years, but that pace may be challenged as prices are high and the U.S. The limited cattle supply is challenging others in the industry, such as the cattle backgrounder and feedlot operators, but they are “rolling with the flow,” he says, adding that the processor is feeling the biggest squeeze on margins. “I don't think we'll see as high margins in the future compared to what we're seeing today, but I think they will still be positive for the foreseeable future,” he says.Ĭlose says the market is structured for cow-calf producers to do well into 2024. As long as that trend continues, he expects margins to stay high. Citing data from CattleFax, auction receipts show heifer sales even with 2022, but video sales show heifers make up a higher percentage of sales in 2023 versus 2022. Cow-calf operators are still selling heifers into the feeding system, Sander says. Heifer retention will be key to strong cattle-feeder margins. “There is a lot of optimism in the cattle-feeding industry right now,” Sander says. “That’s obviously a good thing for the cattle feeder, and it was time for the producer to actually see some profits because they were going through a period of pretty small margins,” Sander says.ĭespite the challenges cattlemen face with higher costs and loftier interest rates, margins are improving and could stay positive for a while. Troy Sander, chair of the National Cattlemen’s Beef Association and chief operations manager for Heritage Beef, says the current high cattle prices give some leverage to the cattle feeder and away from the meat packer. Live Cattle futures and options also saw record trading at a combined 83,347 contracts per day. Open interest – the number of unsettled contracts – also reached a combined 120,046 record. Average daily trading volume in Feeder Cattle futures and options reached a combined record of 20,865 contracts per day. The tight market conditions have shown up in cattle futures and options trading in 2023 as producers and others manage their price risk. Beef cow supplies are at the lowest level since 1962, at 28.9 million head. cattle inventory at its smallest level in eight years, at 89.3 million head. “The earliest opportunity for any increase in production would be in late 2026, and in all likelihood, 2027,” says Don Close, chief research and analytics officer for Terrain Ag. Given the biological nature of raising cattle, it will take a few years for inventories to bottom and herd expansion to begin, completing the cattle cycle. Feeder Cattle futures have seen a similar jump in values over that time. Since bottoming during the depths of the COVID-19 pandemic in spring 2020 at $81.45 per hundredweight (cwt), front-month live cattle futures prices have more than doubled, trading around $185 in fall of 2023. There are a number of forces currently at play, which are continuing to put downward pressure on GB prices.A smaller herd comes at a time when beef demand remains strong, and that is driving cattle prices higher. While declines early in the year are not unusual, it is unusual for prices to fall as far and for as long as they have done since September last year. This led to an overall rise in prices through from mid-2016 to mid-2018. However, high Europe-wide demand for manufacturing beef in those years more than compensated. Even in the relatively high priced years of 20, prices did show drops in the first few months of the year. Historically GB prime cattle prices tend to drop in the first half of the year, reflecting weaker demand for typical cuts at this time. Reduced imports and higher exports are helping to balance the situation, but the market has yet to turn. Combined with heavier carcase weights, driven by the need to feed concentrate over winter, followed by outstanding grass growth, this has tipped the market into a state of oversupply. Demand has also moved towards cheaper cuts sales of steaks, so important for the value of the carcase, have been lower. In its simplest terms, supply and demand have been out of balance, meaning too much beef on the market. What factors might have influenced this downward trend in market prices? Prices have steadied somewhat during the latter part of October 2019 and November, partially supported by temporary Christmas kill demand. Despite a slight rally in April and May, the GB R4L steer price fell 50p between those dates, the biggest drop since 2014. The GB prime cattle price was on a downward trend between mid-September 2018 and October 2019. Weekly finished auction markets by region
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