Tighter cattle numbers in 2022 should mean higher cattle prices. USDA data suggests cow slaughter has been larger this year and the number of heifers placed in feedlots are higher too. This suggests a smaller beef cow herd in January when the USDA conducts its next inventory and fewer cattle. As a result, USDA forecasts fed cattle prices will be $8/cwt. higher next year compared to this year.
Fed cattle prices presently sit above the 5-year average after spending the first half of the year below (Figure 4). Prices for feeder calves, while mostly higher than last year, have spent most of the year significantly below the 5-year average, but in recent months have remained level with the 5-year average (Figure 3).
On the beef demand side, the monthly domestic meat demand index for all-fresh retail beef compiled by Glynn Tonsor at Kansas State University indicated the domestic demand for beef remained strong at least through August. People’s return to restaurants and a growing economy has helped boost demand. Beef demand has also been helped by record exports, projected to end the year at 3.41 billion pounds up 21 percent compared to last year. Retail price levels and slowing U.S. and world economies will be a headwind to demand growth, but beef demand is expected to remain relatively strong. Strong beef demand and fewer cattle should set the stage for better cattle prices.
Figure 3. Weekly Nebraska Steer Calf Price, 500-600 Lbs.
Figure 4. 5-Market Weighted Fed Cattle Prices