Fed and feeder cattle prices are also higher this January compared to a year ago. The Livestock Market Information Center and USDA project prices to move higher throughout 2022, primarily due to lower cattle numbers and good demand for beef. Beef cow herd liquidation, which began in 2019, continued through last year. According to Darrel Peel of Oklahoma State University, December marked the sixth consecutive month feedlot inventories were lower compared to the year prior. This means packers will be bidding on fewer cattle to fill their chains. However, labor shortages due to the omicron variant, could be disruptive to the packing sector early in the year.
As a result of fewer cattle, the USDA projects less beef will be produced in 2022. However, beef demand is projected to remain strong. Consumers have shown a heady demand for beef, despite the increased prices at the meat counter. Growing wages, income, and government assistance have helped fuel the demand. Continued economic growth during the year will help maintain domestic beef demand, but any economic hiccups could see it slip. U.S. beef exports in 2021 were record setting. The USDA projects 2022 exports at 3.27 billion pounds, off some but still relatively high.