Beefenomics

Beefenomics Blog: Cattle Market Update Cattle Cycle Dynamics

William Secor, Ph.D., UGA Department of Agricultural & Applied Economics, writes a monthly blog as part of the UGA Beef Team

While calf prices may retreat on seasonal supply pressure in the coming weeks, overall market fundamentals are shaping up to support calf prices over the next year or longer. The cattle industry is nearing a low in the cattle inventory cycle. As cattle inventory approaches this point, calf prices and cow-calf profitability tends to increase significantly. Cow-calf producers respond to this by growing their herds, which increases the national cattle inventory. When inventories increase, calf prices and cow-calf returns tend to slide. The chart above shows this cyclical relationship between cattle inventory and estimates of cow-calf profitability (accounting for cash costs only).

Because of this relationship, industry watchers are keenly interested when the cattle inventory number bottoms out. Current indications suggest that this turnaround has not started at a national level. This summer revealed lower cattle inventory and fewer heifers being kept for replacement. Additionally, cow and heifer slaughter remained elevated for much of the year. Drought remains a concern in areas that are big cow-calf producers (e.g., Texas). Lastly, heifers as a percent of cattle on feed remained elevated.

Consumers have shown themselves to be resilient beef buyers, so demand does not appear to be a concern barring a recession or other economic shock. Therefore, attention will be on the supply side in the coming months. The next cattle inventory number will come early next year. Before this, we can watch other factors, such as cow slaughter and heifers as a percent of cattle on feed, as leading indicators of the cattle inventory turnaround

Beefenomics: Cattle Market Update - Futures Market Focus - Sept. 14, 2023

Beefenomics: Cattle Market Update - Cattle Price Pause - July 15, 2023

Beefenomics: Cattle Market Update - Resisilient Beef Demand - June 16, 2023

The University of Georgia’s Beef Team is directly involved in beef cattle education. The goal of this team is to enrich the availability of beef cattle information for producers and County Extension Agents.