Time for the mid-year cattle market assessment

Source: Farm Progress. The original article is posted here.

Time for the mid-year cattle market assessment

With the first half of 2024 in the books, it’s worth evaluating the first six months and what to expect for the remainder of the year.

At mid-year, cattle prices are at all-time record levels. Fed steers averaged $195.81/cwt., live basis, and 850-pound, Med/Large, No. 1 steers averaged $255.41/cwt. in Oklahoma auctions prior to July 4. Likewise Boning cull cows, average dressing, averaged $143.22/cwt. with high dressing Breaker cows averaging $ 154.41/cwt. Steers calves are priced slightly below the March seasonal peak but averaged $324.53/cwt. before July 4 for 475-pound Med/Large, No. 1 steers, down from the $350.85/cwt. March average.

Beef production

Beef production is down 1.6 percent year over year in the first half of the year. Thus far, beef production is down less than expected. All of the reduction in beef production is in nonfed beef, with fed beef production actually 0.7 percent higher for the year to date and nonfed beef production down 12.5 percent year over year in the first half of 2024. Steer slaughter is down 1.7 percent and heifer slaughter is down 1.5 percent year over year so far this year, but sharply higher steer and heifer carcass weights are more than offsetting the modest decreases in slaughter. Carcass weight showed little seasonal decline through the first half of the year and steer carcasses averaged 32 pounds heavier year over year in the second quarter of the year with heifer carcasses 26 pounds heavier in the past 12 weeks.

Choice boxed beef prices are just about equal to one year earlier with a price of $329.96/cwt in early July. Wholesale prices for popular grilling steaks are strong at midyear, led by Strip Loins and Top Sirloin. The reduction in nonfed beef production, combined with strong ground beef demand has pushed 90 percent lean trimmings and subsequent wholesale ground beef prices prices to record levels. A mix of five pounds of 90 percent lean and one pound of 50 percent lean resulting in an 83.3 percent lean ground beef formulation has a record wholesale price of $3.26/lb. in early July.

Feedlot inventories

As of June 1, feedlot inventories were equal to one year ago. Feedlot inventories have been stubbornly slow to decrease with annual average monthly feedlot inventories down just 2.2 percent since the peak level 21 months ago in Sept 2022. Feedlot placements are declining but feedlot inventories remain high due to more days on feed and continued large heifer slaughter rates. The strong heifer slaughter suggests that little, if any, heifer retention for herd rebuilding has begun.

Record level prices

Supply fundamentals will continue to tighten for the remainder of the year and beyond. Beef production will likely finish the year down 3.0-3.5 percent year over year, less than previously expected due to continued heavy carcass weights. Feedlot inventories and cattle slaughter will continue to decline, perhaps faster if heifer retention begins in a significant way. Baring outside shocks, cattle prices will remain at record levels and push even higher if herd rebuilding begins in the coming months.

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