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Cattle prices reach new heights

Jordan Anderson 10/23/2013 @ 10:24am Digital Content Editor for Successful Farming magazine and Agriculture.com

After overcoming a recession, drought, and liquidation of many herds in the past two years, cash cattle prices finally moved higher this fall. Factors such as small cattle numbers, a favorable demand base, and lower feed prices have sent feeder cattle futures to record highs and suggesting those prices will move even higher in coming months.

Early August gave way to the lowest finished cattle prices of the summer, lingering just under $120 per hundredweight. Prices shifted just above $120 later in August and through September, recently climbing toward $130.

Feeder cattle futures reached record-high prices of nearly $1.70 per pound on October 14. It is suggested that calf prices possibly reached $175 per hundredweight, but there are not accurate records for October due to the partial government shutdown. Future calf and feeder prices will be largely determined by the direction of feed prices (mostly corn and soybean yields) and finished cattle prices.

Slaughter numbers are also affected by the lower feed prices and increasing finished cattle prices over the next four to five months. Much like the hog industry was expected to, the promising outlook should drive producers to hold cattle longer and send them to slaughter at a higher weight.

SD blizzard impact

The death rate of cattle caused by winter storm Atlas is estimated to be near 100,000.  While this number is detrimental to individual cattle producers, it does not change much on a national scale. The cattle lost represent one-tenth of 1% of the nation’s 89 million cattle.  

The impact of the blizzard is expected to increase finished cattle prices by only 20 to 35 cents per hundredweight during 2014.

Herd expansion?

The drought and high feed prices last year caused many people to liquidate their herds.  

“By my estimation, the 2013 calf crop is the smallest since sometime around 1942,” said Derrell Peel, Oklahoma State University Extension livestock marketing economist. “I don’t have data that goes back far enough to (show feeder supply to) be as small as I think it is this year.” 

This means feeder cattle supplies will be stretched even thinner. “We’re going to see feeder supplies that won’t reach their tightest point until 2015 and probably 2016,” he says. “Maybe sometime in 2016, we begin to transition into a little bit bigger feeder calf supply. In the meantime, we’re going to have not only limited numbers but extremely high prices.” According to Peel, the growth we have seen will project January 2017 cattle numbers to be where they were in 2011.

Even after the drought, it is estimated that the dry regions of the U.S. still accommodate about 45% of brood cow herds. Though the outlook seems encouraging to start heifer retention, expansion of beef herds will remain slow until there are better pasture and forage conditions.

Look for expansion of the cattle industry over the upcoming years; however, it will be a slow growth. It may not produce the most immediate results we could hope for, but it is more promising than the decline of the past few years.

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