TumbaPato US

THE CATTLE PRICE EXPLOSION IS NOW!

Last summer at the 2021 Cattle Industry Convention, market experts from CattleFax told beef producers they could anticipate an explosion in cattle prices within months. Boy, were they right.

The surging market for all classes of cattle explains the smiles on producers’ faces at the 2022 Cattle Industry Convention, taking place this week in Houston. Fed cattle prices, now near $140 per cwt, are up $25 from last year. Feeder calves are now over $2 a pound at many auction markets, from $1.60 last year.

The reason for the explosion is exactly what CattleFax predicted: We finally got through a backlog of heavyweight cattle brought on by the COVID pandemic, when processing plants slowed production or completely shut down. That had put packers in the driver’s seat of price discovery, with too many cattle and not enough slaughter capacity. 

Now, beef producers have gained back most of that leverage, said Randy Blach of CattleFax this week. “Beef demand is the highest in 33 years,” he said at the price outlook report. “We had record-high retail beef prices last year, along with record pounds of production.”

The good times should last a while with a shrinking beef herd, according to the latest USDA report, which showed cow numbers declined last year to 30.1 million head. Much of that decline in numbers is attributable to lingering drought over the Great Plains, where 35% of the nation’s cow herd lives.

Here’s what else CattleFax predicts for cattle price outlook in 2022.

  • Fed steers: $140 per cwt average for the year, with tops up to $155. That’s $300 per head more than last year.
  • Feeder calves: (550 pounds): $205 per cwt average for 2022, up $35 from last year. Tops could be near $230.
  • Cull cows: Even they are in high demand for their meat-grinding value, and could be in record price territory at $75 per cwt average, and $85 tops.
  • Bred cows: They could average $1,850 a head, up $225 from last year. Tops could be over $2,000 per head, depending on weather and location.

The leverage balance between packers and producers is still a major influence on fed cattle prices, and that market ripples down to the other markets such as feeder calves. As cattle supply shrinks and packing capacity improves over the next few years, leverage for producers to dictate the market will continue to improve, says CattleFax.

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