Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University
Cattle markets through the first two months of 2024 have built upon the strong prices from 2023 and pushed even higher. Cattle auction prices are at or above record levels across all categories. The chart below shows average weekly prices for three weight categories of steers in Mississippi from January 2011 through March 8, 2024. Average prices during the first week of March 2024 were up 33 to 47 percent above year-ago levels depending on weight range and were roughly 80 percent above March 2022 levels.
The current prices exceeded the price records previously set during Fall 2014. Cull cow prices have similarly risen and are up roughly 25 percent over the past year and up 40 percent over two years ago in Mississippi. the current cull cow prices are near the spring 2015 peak.
Feeder cattle supplies are the tightest they have been in a decade and are expected to tighten further this year. Higher levels of cow-culling and lower retention of heifers as beef cow replacements in recent years have likely set the stage for a smaller calf crop in 2024. Drought conditions, higher input costs, and tight profit margins have been key factors for the decline in inventory. The estimated number of calves produced in 2023 was 33.6 million head which was similar to the 2014 level and down by more than 3 million head since 2018.
The higher prices are a response to the tighter supplies and should eventually incentivize expansion as producers’ financial situations improve. But it is important to note that the cattle needed for expansion (i.e. heifers and cows) are currently supporting feeder cattle and beef totals. When widespread expansion begins and producers begin keeping more heifers and cows in their herds, there will be even fewer feeder cattle and cull cows available to be sold for beef until the increased calf crop catches up.
The majority of cattle producers in the U.S. sell their calves in the fall months and the current expectations are for prices to remain strong through 2024. CME feeder cattle futures contracts for the fall months are trading near $270 per CWT. For reference, the CME feeder cattle contracts have never settled above $255. The strong expectations for cattle are leading to attractive risk management opportunities for producers. Whether it be using futures, options, or USDA Livestock Risk Protection (LRP), now is a great time to analyze price risk management tools.
