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Record high calf, feeder cattle prices expected by 2025

Cattle market

The U.S. is probably going to have record high calf and feeder cattle prices in the next few years – probably by 2025.

“It could even be earlier than that depending on corn prices and so on. We’ll just have to wait and see,” said Tim Petry, NDSU.

The U.S. meat industry broke records with the amount of meat produced in 2022, according to Tim Petry, NDSU Extension livestock marketing economist.

“We’ve been setting records in meat production. We set a record for beef and chicken in total, and also on an individual commodity basis,” Petry said in mid-December.

The U.S. produced 140 billion pounds of beef last year, and normally, record high meat production means lower prices.

“Interestingly enough, even though we have had record beef and chicken production, prices have stayed relatively high on a weekly basis,” he said.

Pork production in 2022 was slightly behind the record set in 2020.

The only exceptions to the record high meat production are lamb and veal, which were at record lows.

Broiler prices reached record highs last summer and will likely be a record for 2022.

“Avian influenza had something to do with that,” he said.

However, there will still be record chicken production this year, in spite of influenza.

“We’ve got record high prices in the U.S. for a lot of commodities and record high production,” Petry said. “In order to have these record high prices, we have to make it up with demand.”

Demand for meat has been very good and “better than expected,” according to Petry, and export demand for meat has stayed high.

However, in some individual cattle market classes, the U.S. has not been at record high levels.

“We were greatly affected by the drought the last couple of years,” he said.

The U.S. expected beef production to fall because the cow herd has been decreasing for four straight years. However, with the drought, the U.S. slaughtered more cows.

Cow slaughter has been up 12 percent this year. Fed steer slaughter, however, has been down because we’ve got lower numbers,” Petry said.

There have also been fewer replacement heifers in the U.S. In fact, on July 1, 2022, the U.S. had the lowest number of replacement heifers on record going back to 1993.

Replacement heifer slaughter is up 5 percent.

“That has given us the high record production and has kind of put a limit on prices with the more cattle that we are selling,” he said.

Fed steer prices have averaged $20 per hundredweight more than they did in 2021, with prices moving up throughout 2022, and are the highest since May 2015.

“The futures market is saying we’ll have record fed cattle prices next year, and the USDA is a little bit more conservative, but they’re still saying we'll have a record next year at $155.50,” he said.

In North Dakota, the 550-600 pound calves averaged $30 better than they did in 2021.

“We are quite a ways off the pace for record prices as of now, although we are enjoying cyclically higher prices,” Petry said.

The average North Dakota 550-600 pound steer calf in 2014 was $250.

“We’re right at $110 now and we’re likely do better next year,” he said.

So what’s holding North Dakota back on the feeder cattle versus fed cattle?

“The two major things that affect calf and feeder cattle prices are fed steer prices and corn prices,” he said.

Fed cattle prices are going to be at record levels, but unfortunately not as high annually as in 2012.

Corn on a weekly basis did hit a record high earlier in the summer, and the calendar year USDA corn price average in 2014 was $4 a bushel and it hit $7 a bushel in 2022.

“We’ve got $3 higher corn to deal with. Again, remember my old adage: change corn up 10 cents a bushel; change calf prices a buck in the opposite direction. So we are further off from hitting record highs in calf prices, although we do expect them to be cyclically higher,” he said.

The cattle market is watching corn prices for 2023.

“As of now, given what the 2023 corn futures look like, and although we'll be cyclically higher, we won’t be quite at record levels on the yearlings as we are on the fed cattle,” he said. 

Since the cow herd has dropped four straight years in a row, and there is still 70 percent of the cow herd in drought, Petry is unsure of what will happen in 2023.

“I don’t know what’s going to happen later this year (2023) when it starts raining and then we start keeping heifer calves back and sell a lot fewer cows,” Petry said. “Beef production is going to drop sharply and that’s going to certainly spark prices.”

The U.S. is probably going to have record high calf and feeder cattle prices in the next few years – probably by 2025 – according to Petry.

“It could even be earlier than that depending on corn prices and so on. We’ll just have to wait and see,” he concluded.

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