Current cattle markets foretell 2014 market expectations
The counter-seasonal behavior of cattle markets this fall indicates the transition occurring in beef and cattle markets. The fourth quarter of 2013 provides insight into the general expectations for markets in 2014. Cattle slaughter for the year to date is down 1.7 percent but is down an average of 3.6 percent in the last four weeks. Though beef production is down only 1.1 percent for the year to date, it is down an average of 2.9 percent in the last four weeks.
Both cattle slaughter and beef production are expected to decline for the remainder of the year, bringing fourth quarter cattle slaughter down over 5.5 percent, year over year, and beef production down over 5 percent.
For 2014, cattle slaughter is expected to decrease roughly 7 percent year over year, leading to decreased beef production of over 6.5 percent for the year.
Choice boxed beef prices have averaged above $200/ cwt for the last four weeks and fed cattle prices have averaged above $130/cwt for the same period. Both of these prices could average at or above these levels for the entire year of 2014, with spring peaks of $215/cwt or higher for Choice boxed beef and fed cattle prices approaching $140/cwt for a spring top. All eyes will be on the demand side as the supply side of these markets will certainly support even higher prices than these if demand is sufficient.
Feeder cattle prices have strengthened this fall to the highest levels of the year. Heavy feeder prices are at record levels and, while calf prices have not quite exceeded the spring 2012 record price levels, they surely will in the spring of 2013, barring something unforeseen.
Feeder supplies are no doubt tightening this fall with a smaller 2013 calf crop, fewer feeder cattle imports in 2013 and accelerating replacement heifer demand this fall. The 2014 calf crop will be as small, or smaller, than this year; feeder imports are likely to remain low; and replacement heifer demand will remain very strong as long as forage conditions are favorable.
Breeding female and replacement heifer demand is very strong this fall. Replacement heifer demand that emerged about a month ago in the Northern Plains has now spread to much of the central part of the country with numerous reports of lightweight heifers selling at prices well above steer prices.
During the week beginning Nov. 11 in El Reno, OK, several sets of heifers sold in the weekly feeder auction as replacements; including a market-topping set of 668-pound heifers at $208.55/cwt. ($1,393/head) and another set of 560-pound heifers at $240/cwt. ($1,344/ head). Two sets of fourweight heifers sold for over $220/cwt.
At the Northwest Cattlemen’s Association fall replacement sale during the same week in Woodward, OK, bred heifers ranged from $1,675-2,250/head; young to middle-age bred cows ranged from $1,350- 2,500/head; and cow-calf pairs from $1,950-3,000/ pair. Female demand will certainly be as strong, if not stronger, in the spring, once again, assuming that forage conditions continue to look favorable. — Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist