Cattle producers are concerned about whether consumers will continue paying higher retail beef prices. Despite financial stressors like high interest rates, rising credit card debt and inflation, average per-person expenditure on beef has increased even as per-capita supply has declined. The beef market is expected to stay strong as competition among feedlots and packers intensifies due to fewer cattle.
As of August 1, over 2.9 million acres in the West were affected by active fires, with every state in AgWest’s territory experiencing ongoing blazes. Although ranchers are prepared to move their cattle in cases of emergency, rapid fire spread can hinder timely evacuation. In eastern Oregon, two major fires merged, burning over 420,000 acres and resulting in cattle losses. Over 390,000 acres have burned in a Northern California fire with statewide wildfire activity 28 times greater than this time last year. These fires will reduce available pasture, forcing ranchers to delay grazing and purchase additional feed for this year. Some affected producers are considering early weaning of spring calves, marketing them earlier than planned and at lighter weights to mitigate pasture losses. Without the calf, cows might better handle tougher pasture conditions than cow-calf pairs.
Western pasture remains dry, similar to 2023. Montana faces the largest drought increase, with more than double the acres in moderate or more extreme drought compared to last year. Grasshopper issues in eastern Montana are leading to lower cattle body condition scores. Drought may push producers to bring more calves to market sooner, potentially causing a seasonal decline this fall. Despite this, prices remain above historical averages. Feeder steer auction prices across the West are forecast to average 8% higher year over year. This holds true for Montana where feeder prices are up 8%. California’s and Washington’s prices have stabilized but remain historically strong.
Profitability
AgWest cattle producers are poised to see advantageous pricing and strong returns. With the current market conditions, cow-calf producers are presented with a favorable dilemma: retain their cows to benefit from strong calf prices or opt for culling to take advantage of the significant value of cull cows. Additionally, cow-calf operations will benefit from lower feed costs and improvements in pasture conditions. While higher interest rates, almost double those of the last expansion period (2013-2015), do pose a challenge, revenues will surpass the rise in input costs. Cow-calf operations are projected to see margins surpassing $500 per head in 2024. As the cattle cycle replenishes the national herd, cow-calf producers should benefit from sustained high prices until at least 2025.
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