As a livestock market analyst, it's not only my job to track the markets day to day, but to also look at the market from 50,000-feet to see what roadblocks may be ahead. I try to predict what could hinder the market in the next several months or year.
As I prepare for Friday's (July 21) Cattle on Feed and midyear Cattle Inventory reports, I can't help but be optimistic.
I have a hard time believing the midyear Cattle Inventory report will show producers have begun to keep back heifers. First, regardless of where you reside, it seems as though producers understand it's simply too costly to retain heifers in this market. The missed opportunity cost of selling a $1,700 to $2,000 heifer is substantial, especially when most producers could use the extra cash.
Second, hay production has been hit and miss this year, with some regions struggling to get hay put up because of late spring/early summer rains, while other regions continue to fight drought limitations. All that indicates feed prices this fall and winter could still be high, especially if our neighbors to the North (Canada) start to pull hay supplies out of Montana and North Dakota.
For more on hay prices and supply see "Forage Concerns Persist" by DTN Reporter Russ Quinn here: https://www.dtnpf.com/…
Last, we can't overlook the beef cow slaughter data that's made available to us on a weekly basis. As of July 1, the market has processed 1,744,578 head of beef cows this year. Compared to 2022, this year's beef cow slaughter is down 11%. However, compared to 2021, 2023's beef cow slaughter is up 1% and, compared to the market's five-year average, 2023's beef cow slaughter is trending up 3%.
"Total cows/heifers calved are expected to decrease 1.9% with beef cows/heifers down 2.3% and milk cows/heifers marginally lower by 0.7%," in Friday's Cattle Inventory report, according to the Daily Livestock Reporter. "Heifers 500 lbs. and over are forecast to decrease 2.6% with a range of estimates down 1.6% to 3.7%. Of the heifers 500 lbs. and over, beef replacement heifers are expected down 3.6%, milk replacement heifers 1.5% lower, and other heifers 2.6% lower."
Given what we know about the rate of beef cow slaughter in 2023, those estimates seem plausible. Which leads us to the biggest question of all: How will Friday's report affect the market?
The midyear Cattle Inventory report never affects the market as gravely as the January report does, but the verification that producers are not keeping back females should support the feeder cattle market as tight supplies will continue to be a theme into 2024.
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
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