Top 10 Ag Stories of 2023: No. 6

Editor's Note: Each year DTN publishes our choices for the Top 10 ag news stories of the year as selected by DTN analysts, editors and reporters. This year, we're counting them down from Dec. 18 to Dec. 29. On Dec. 31, we will look at some of the runners-up for this year. Today, we continue the countdown with No. 6: Despite high cattle prices, cow-calf producers were reluctant to expand the nation's beef cowherd in 2023 because of continuing drought in some areas and challenges to afford or access feedstuffs.

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OMAHA (DTN) -- The No. 6 story of the year is cow-calf producers are slow to rebuild the nation's beef cow herd because of continuing drought, despite sharply higher cattle prices.

Issues with forage and feed availability slowed the growth of the nation's herd. In addition, declining cattle prices into the last quarter of the year presented another challenge.

The High Plains region saw more drought in 2023 after many areas saw dry conditions in 2022. The 2022 drought limited cowherd expansion in these areas with reduced grass and forage production, which lingered into 2023 in the form of high-priced hay. Read about that here: https://www.dtnpf.com/….

Then, more drought in the 2023 growing season again caused many High Plains cow-calf producers to cull a portion of their herds due to a lack of grass. Read about that here: https://www.dtnpf.com/…. The good news is many locations did see some moisture in midsummer and hay production appears to be better in 2023 than it was in 2022.

Areas of the Great Plains remain dry with different drought designations as 2023 wraps up. See the latest Drought Monitor map here: https://droughtmonitor.unl.edu/… . What this means for forage availability and price into 2024 is not fully known.

CATTLE PRICES SOARED

As for cattle prices, things were soaring until Oct. 20, 2023. This is when USDA surprised markets with a higher-than-expected 2.206 million head of September cattle placements.

Futures prices kept rising into 2023 as it became obvious available cattle numbers were scarce and packers were having to bid up to secure their weekly needs. In April, the negotiated price of live cattle broke above the previous record high from 2014 and kept rising, reaching a new peak above $190 in June.

At the same time, the price of choice boxed beef hit a new high of $343 per hundredweight (cwt) as it looked like retail demand was tolerating beef's higher prices. After the June peaks, cattle prices held roughly steady through summer, while choice boxed beef prices slipped back near $300/cwt.

Cattle producers received more good news as widespread rains in July brought down expensive corn prices. Seeing cattle's rising prices, specs were lured into the market, holding almost 100,000 contracts net long in mid-September. CFTC data also suggests selling put options on feeder contracts became a popular way to profit from cattle's rising prices.

When USDA's bearish report came out on Oct. 20, it was not a surprise the news of higher placements was greeted by selling, but the extent of the selling became a bearish shock in the weeks following the report.

From a close of $187.72 in February live cattle on Oct. 20, prices fell to a low of $162.40 on Dec. 7, a drop of roughly $25 in 48 days versus a drop of $17 in the cash price of negotiated live cattle. No one can guarantee the low is in, but a lot of damage has been done in a market that will eventually need more calves to rebuild the herd in the years ahead.

To see more about our DTN countdown, see the Editors' Notebook blog at https://www.dtnpf.com/….

To see the other top stories of the year:

No. 10: "Livestock Producers Lean Into USDA's Livestock Risk Protection Coverage (LRP)," https://www.dtnpf.com/…

No. 9: "Supreme Court Rules on Two Major Ag Cases," https://www.dtnpf.com/…

No. 8: "EPA's Plan to Protect Endangered Species From Herbicides Draws Criticism," https://www.dtnpf.com/….

No. 7: "The High Cost of Some Inputs Fall, But So Does Farm Income," https://www.dtnpf.com/….

You can find No. 5 in DTN's Top 10 list on Dec. 25.

DTN Lead Analyst Todd Hultman contributed to this article.

Russ Quinn can be reached at Russ.Quinn@dtn.com

Follow him on X, formerly known as Twitter, @RussQuinnDTN

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