High cattle prices offset by increased cost

 For the whole lot of 2023, slaughtered steer costs throughout all U.S. markets have remained above these of the earlier 12 months by 20-30 cwt, starting from $155 to $170, and virtually soared above the 2017-2021 common by 40 cwt or extra. In line with current knowledge from the U.S. Division of Agriculture, fed steer costs reached above $175 cwt final week, topping the 2014-2015 file of about $172.

 However in fact, a greenback in 2023 just isn’t what it was in 2014. In line with the U.S. Bureau of Labor Statistics, inflation throughout these 9 years has lowered the worth of a greenback spent within the shopper worth index by 28 cents.

 James Mitchell, extension livestock economist for the College of Arkansas, mentioned inflation is only one cause to maintain at the moment’s market costs in perspective.

 “I wouldn’t say we’re close to ‘file territory,’” Mitchell mentioned. “I’d say now we have costs as excessive as we’ve seen within the final 10 years in nominal phrases — which continues to be nice. You must watch out the way you interpret that, nevertheless.”

 Mitchell additionally emphasised that the cattle trade, as an entire, abides by a cyclical nature.

 “We’ve had three, 4 consecutive years of liquidating cow herds, of tighter and tighter feeder cattle provides, and that’s pushed considerably greater,” he mentioned. However producers shouldn’t anticipate that upward pattern to proceed indefinitely.

 For cattle producers within the U.S. Southeast and elsewhere, 2014-2015 was an unforgettable season, for causes each good and dangerous. Costs spiked to file highs on the finish of 2014, owing largely to market demand, at a time when feed, gas and different enter costs remained comparatively low. When provide started catching up, nevertheless, market competitors pulled the ground out from beneath these costs, leaving many producers with bigger herds they needed to both preserve or dump at much-lower-than-anticipated costs.

 Mitchell mentioned that at the moment’s excessive enter costs, whereas largely the bane of many producers’ existence, will a minimum of assist maintain the cattle market costs.

 “All of the inputs are a lot greater than they have been 10 years in the past,” he mentioned. “Corn continues to be excessive, fertilizer continues to be excessive, gas continues to be excessive. So, as a result of profitability hasn’t moved up as excessive as costs have, I do suppose we’re going to see costs keep excessive for a extra extended interval period of time. Once we received into the autumn of 2015, it appeared like costs simply fell out from below us, and we continued alongside that path for the subsequent couple of years.”

 As at all times, spring and summer season climate will play the wild card in cattle manufacturing. Whereas Arkansas has seen a reasonably moist few months, that augers nothing for the summer season, when rainfall will probably be extra vital for offering grazing materials to livestock.

 “We’ve been fairly lucky in Arkansas, however I’d argue that moisture actually doesn’t matter now as a lot because it does within the subsequent few months,” Mitchell mentioned. “We’d like well timed, satisfactory rainfall by way of the spring and summer season, when it issues most for each forage manufacturing and hay manufacturing. It doesn’t matter an entire lot if we’ve received rain in February and March.”

 Even when Arkansas does see a dry summer season, the state’s cattle producers nonetheless have a lead on some neighboring states which have dwelled within the doldrums of drought for greater than a 12 months now.

 “We nonetheless have two of our largest cattle states, Oklahoma and Texas, which are nonetheless very a lot in drought, in order that’s limiting the choices for lots of these producers,” Mitchell mentioned. “Kansas is in much more of a extreme drought state of affairs.

 “The costs could also be excessive, but when we don’t have grass to feed cattle, there’s nothing we are able to do about it,” he mentioned.