Cattle Prices Mooooooving Higher

Cattle prices in Nebraska are moving higher. In fact, fed cattle prices have hit levels never seen (Figure 1). Data from the USDA Agricultural Marketing Service shows the average fed cattle price in April was $179.62 per cwt., the highest monthly price ever recorded. The average May price was $178.29, off slightly from April. The previous high occurred in November 2014 when the average price topped $170 per cwt. Prices for feeder cattle, while not yet record highs, are climbing too. The average monthly price for 500-600 lb. steers in May was $271.10 per cwt., closing in on the all-time high hit in June 2015 of nearly $300 per cwt.

FIGURE 1. MONTHLY AVERAGE NEBRASKA CATTLE PRICES, 2011-2023

Source: USDA AMS data compiled by Livestock Market Information Center. Fed cattle prices are negotiated price averages for steers across all grades. Feeder cattle prices are for steer calves weighing 500-600 lbs.

The reason for climbing cattle prices? Fewer cattle and a steady demand for beef. Nebraska’s cow herd has been shrinking, off almost 11 percent since the most recent peak in 2019. As of January 1, the herd numbered 1.703 million head, the smallest herd since 1963. And Nebraska is not alone. Most major cattle states have seen their cow herds dwindle. Drought, reduced feedstuff supplies, and increased costs forced many cow/calf producers to liquidate a portion of their herds. A smaller herd means fewer calves, leading to higher prices.

A steady demand for beef is also contributing. The monthly domestic meat demand index for all-fresh retail beef compiled by Glynn Tonsor of Kansas State University remains at pre-pandemic levels, although off from levels seen since 2020 (Figure 2). And better-than-expected beef exports have also helped support cattle prices. According to the USDA, first quarter U.S. beef exports were 779 million pounds, about 8 percent lower than last year’s record, but still 2 percent higher than the 5-year average. 

FIGURE 2. MONTHLY ALL-FRESH RETAIL BEEF DEMAND INDEX

Source: Glynn T. Tonser, Kansas State University

The USDA projects cattle prices will increase into next year. The higher prices afford cattle producers the opportunity to achieve profitable returns. Tonsor projects average net returns for finishing steers in Kansas feedlots to remain positive for the remainder of the year. Moreover, cow/calf producers could see per cow earnings return to record levels seen 8-9 years ago. Positive returns for cow/calf operations could mean a rebuilding of herds is not far behind. But most observers do not expect to see larger cow numbers until 2025.