As we close out another year, let’s reflect on it and look ahead to what the new year is projected to bring.
For cow-calf producers who have survived the dry conditions many areas of the country have experienced, the outlook is that 2024 will continue to be profitable. According to CattleFax, the calf prices we saw in 2023 — with calves averaging 550 lb. and bringing $220+/cwt — are expected to keep climbing. This is good news for cow-calf producers.
Also projected for 2024 and the next few years is a slower transition toward expansion, with tighter cattle numbers and reduced beef supplies. The challenges leading to this probably come as no surprise for cattlemen: high costs and interest rates, limited labor, drought conditions, and economic uncertainty. Due to these factors, it was estimated at the recent CattleFax Outlook and Strategies meeting that the current cattle cycle will be slower and more prolonged than previous cycles, and that the beef cow herd is not expected to show an increase until 2026.
Here are a few headlines reflecting on the past and looking ahead:
Looking back on 2023:
Due to the tighter overall supply, cull cows on average are currently $250 higher per head than last year. Many reports from various areas around the U.S. have indicated an increase of open cows at pregnancy check. In particular, some producers across western Nebraska and South Dakota have reported only 30% of the herd bred. While cull cow values are up, the potential ROI on raising $3 calves, versus being open, hurts the producer’s pocketbook. Drought and forage conditions may be to blame; however, could have offset this poor reproductive performance and should be closely evaluated into the next year.
Inflation impacts each aspect of the cattle industry. For feeders and stockers, it impacts breakeven cost, which may be tight as is. For cow-calf producers, may impact both retention and the making of expansion decisions, which affect how quickly the producer can grow or rebuild their herd. Interest rates have increased significantly over the past couple of years, but it appears this may level off and even decline by the second half of 2024. However, according to reports, rates are not likely to return to levels as low as before the increase.
Looking ahead into 2024 and beyond:
The El Niño weather pattern we are currently experiencing is projected to peak soon, then fade in early 2024 into La Niña for the remainder of the year and possibly into 2025 and 2026. From now through February, northern states are expected to have than average temperatures, and southern states should have near-average to colder-than-average temperatures. Precipitation is expected in the Southeast and West at times during these months, but it may not amount to enough to offset the drought conditions in the Southern Plains before the next drought cycle quickly approaches. From March through spring, La Niña will take over and may stay in place for the next couple of years.
With favorable prices for the producer, the next question is often, “What will this do to price and demand for beef?” Fortunately, economic growth has been stable, Additionally, a strong employment rate supports beef demand. While inflation is a valid concern, the consumer still finds value in beef when compared to competitive meats, though inflation may limit demand at the retail sector. Overall, beef demand has proven to be resilient.
Within the cattle industry, with This is good news for many of our own dealers and end users. Proper nutrition and supplementation is necessary to maximize these opportunities within your operation. Contact your local Crystalyx® dealer for the necessary nutrition to extend the return on your investment during these favorable times.
We appreciate your trust and business throughout this past year, and we look forward to what 2024 will bring as we continue to support your operation by providing the most reliable self-fed supplement in the business. Wishing you a happy and healthy New Year!