Call the Market

Believe me, just like everyone else in the cattle business, I enjoy tracking the market's current prices and seeing both the live cattle and feeder cattle markets trading at near-historic highs. But I also know that the cattle market runs in a cyclical cycle, which usually spans somewhere between seven to 10 years, and that at some point, the high point in the market will sunset and prices will soften again.

As both a cattle producer and a market analyst, I often think about how cattlemen can better position themselves now to withstand the pressures that the market could be taxed with in the next phase of the cycle. That is why I need to bring to your attention the industry's current trend in carcass weights.

Thus far through 2024, steer carcass weights have averaged 919 pounds, which is 18 pounds heavier than what carcasses were averaging at this point in 2023, 10 pounds heavier than the market's five-year average, and a whopping 128 pounds heavier than what steer carcasses were averaging 24 years ago in 2000.

Derrell Peel, Oklahoma State University Extension livestock marketing specialist, recently touched on the matter and wrote, "Carcass weights have trended heavier for over 60 years with steer carcass weights increasing by an average of 4.0 pounds per year, up over 240 pounds from 660 pounds in the 1960s to over 900 pounds in recent years." He added, "Carcass weights are further boosted at the current time by decreasing cattle numbers, which increases incentives to feed cattle longer as they try to maintain feedlot inventories. Decreasing corn prices adds additional incentive to feed cattle longer. Kansas feedlot data shows that steers are currently averaging 190 days on feed, up nine days from one year ago and about 40 days longer than a decade ago. Increasing carcass weights are the result of more days on feed combined with changing cattle genetics and use of feeding technology."

I understand that in today's market environment, the trend of higher carcass weights seems to have little cost or little effect on the market as a whole. But what about when the industry sees cattle supplies rebuilt, and feedlots have far greater numbers of cattle to market on a weekly basis? Not only will feedlot managers simply have greater numbers to market every week, but they'll also have put more money into those cattle, as they're now needing 190 days on feed to finish!

The trend in carcass weights should be alarming to cow-calf producers for many reasons.

First, we know that packers manage two sides of the market -- the procurement of live cattle for processing and available meat supplies to market for retailers. So, when supplies are rebuilt and these heavier carcass weights are contributing more product to the industry than what consumers potentially need, how soft do you think cash cattle prices will get? This then trickles down to affecting feeder cattle prices, as feedlots will be flush on inventory as they likely struggle to market their showlists and consequently will have less money to allocate to feeder cattle purchases.

Secondly, we can't overlook and dismiss the effects that this trend is having on the females. Heifers that cow-calf producers are keeping back in their herds to be cows are getting bigger as well. Input costs are already high, and yet here we are breeding cattle to need more inputs.

I understand that we need cattle that feed, grade and yield well, but bigger isn't always better. I'm afraid that we are going to learn that lesson the hard way when the market softens in the next phase of this cycle.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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