The recent CattleFax Outlook Seminar said prices and profitability will favor cattle producers in 2023. Kevin Good is the vice president of industry relations and analysis with CattleFax, and he talks about this year’s report.
“What it showed was a bigger reduction in the female side – cows and replacement efforts – than was expected. So, because of that, you know, we’ve said in here that we’ve liquidated for four straight years. We’ve had massive liquidation. We’re about two-and-a-half million off our peak in beef cow numbers, and therefore, as we go forward, we’ll have fewer cattle go into the systems, in the feed yards, and in beef production. And therefore, it should allow the continuation of the trend for higher prices that we’ve experienced over the last two-and-a-half years from the COVID low, we’ve been trending higher. This will make it more pronounced as we go through 2023.”
Getting out of that cycle will depend on one big factor.
“It all depends on Mother Nature, and the way it’s setting up to start the year, there are better prospects for improved moisture. Our weather forecaster would suggest we’re transitioning away from the dry pattern into a more normal pattern and then into a wet pattern, hopefully by the second half of the year. But the challenge is you’re so dry coming in, hay stocks are the lowest they’ve been in fifty-plus years, high input costs, and heifers-on-feed are at a record-high percentage. All that tells us is that we probably still are going to endure liquidation here in 2023.”
He says it will take some work, but the cattle herd should start to grow in 2024 and 2025. One positive is as the cattle market continues to get smaller, prices keep going up.
“We’re as high as we’ve been since the 2014-2015 timeframe, the last cycle highs. So, we have been trending higher the last couple of years out of the COVID low, so we’ve already got that moving. But unfortunately for the producers, with high input costs, labor, interest rates, and all that, it is going to take more dollars to be profitable.”
While nothing is guaranteed, Good says cattle producers can see some profitability in 2023.
“Absolutely, the margin operators, the folks in the feed yards, they buy cattle and feed them for half a year themselves, so an up-trending market is positive for their profitability. Same with a stocker or backgrounder, or he’s buying calves and selling yearling-weight cattle, so he will be profitable. The cow-calf producer’s the one that’s carrying the brunt of the added input costs because he can’t pass them back down. Those producers, we would suggest this year will be profitable if, and I say if, they’ve got feed resources, and that’s the key.”
