Final week, Josh offered an summary of the 2023 cattle market. Whereas he mentioned the problem of excessive grain costs, he largely wrote a couple of common optimism stemming from tighter cattle provides as we begin this new yr. Undoubtedly, most market fundamentals level to a significantly stronger cattle market throughout all sectors this yr. This text will briefly talk about three questions that might be answered by the markets between now and spring.
How robust will fed cattle costs be?
If the cattle market had a pulse, that pulse could be money cattle commerce. Even in a feeder cattle state like Kentucky, one can not downplay the importance of the fed cattle markets. They set the tone for the general cattle market and deferred stay cattle futures drive feeder cattle values by means of value expectations. Actually, there are some danger components that would impression beef demand this yr, however there’s little doubt that beef manufacturing might be down an important deal from 2022. As I write this, fed cattle costs are within the higher $150’s, however the April CME© futures contract exceeds $160. The upper the fed cattle market will get this spring, the extra optimism there might be by means of the remainder of the yr.
How a lot smaller is that this beef cow herd?
There isn’t any doubt the meat cow herd shrank final yr and the 2023 calf crop goes be a lot smaller. It’s actually only a query of how a lot smaller the calf crop might be. Beef cow slaughter ran greater than 10% increased final yr and extra heifers entered the meat provide chain. Culling was operating very excessive as nicely – together with the primary quarter. So, we’ll seemingly see impacts on calf numbers this spring and fall. USDA will launch their estimate of beef cattle stock later this month, however it’s arduous to think about that this calf crop received’t be no less than 3% smaller than final yr’s.
How far will this spring calf market run?
The calf market improved in 2022, however increased manufacturing prices saved most cow-calf operators from absolutely having fun with the value enchancment. Diminished fall pasture development and poor wheat grazing situations additionally prevented the autumn calf market from reaching ranges it might have seen in any other case. As we transfer into spring, the impacts of pricey feed might be considerably overshadowed by grazing alternatives. In fact, the calf market has improved fairly a bit since fall. Nevertheless, with fall 2023 CME© feeder cattle futures nicely above $2 per lb, we’re more likely to see calf value ranges that we’ve not seen since 2015 as soon as we begin seeing some spring pasture development.
