94 NEBRASKA CATTLEMAN February 2025 PEERS ON THE CUSP JEFF STOLLE | NC VICE PRESIDENT OF MARKETING As I write this in early January, the cattle feeding industry is just a few days removed from seeing negotiated fed cattle sales at predominately $315 dressed and $200 live on the bulk of the volume in the Nebraska Cattlemen Market Reporting Service (NC-MRS) trade area to ring in the new year. Prices shot up $3 to $4 per hundredweight live and $8 per hundredweight dressed vs. the previous week’s thin between-the-holidays test, and the week’s U.S. Department of Agriculture (USDA) Livestock Mandatory Reporting (LMR) Nebraska dressed steer weighted average of $315.19 was a new all-time high, eclipsing the old record of $313.99 from the first week of July 2024. The bulk of the finished cattle supply at this point is yearling types of one sort or another from the 2023 calf crop. So it stands to reason that working from a Jan. 1, 2024, USDA total feeder cattle supply (outside of feedyards) that was estimated to be down more than 4 percent from a year earlier – and at the tightest level in more than a decade – the industry could be nearing overall fed steer and heifer inventory levels that are snug enough to result in windows where packers may struggle putting together sufficient head counts to fuel baseline five-day weekly slaughter schedules. In the short to medium term, plants could find it even more of a challenge to access sufficient supplies to add Saturday production runs every now and then. Further, the commencement of harvest operations at two newly built plants (one in North Platte and the other just northwest of St. Louis) during early April of this year would appear make competition even a bit keener for market-ready cattle. All that said, it is important to note that, in spite of reductions in fed cattle and especially cow slaughter rates in 2024, total beef production was down only 0.6 percent from 2023’s total. The divergence of the downward trendlines in slaughter numbers and total beef production was due to record-large weekly average fed steer and heifer carcass weights persisting throughout the final 10 months of the year. The elevation in carcass weights was driven by a number of factors, chief among them the considerable spread between prevailing cash fed cattle prices (essentially ranging $180 to $195 per hundredweight for most of the year) vs. prevailing end-of-feeding-period feedlot costs of gain (a number that is admittedly more difficult to peg, but let’s say $110 to $130 per hundredweight for most of the year, interest included). Such a spread in “marginal costs” vs. “marginal revenue,” especially when coupled with an environment of constricted feeder cattle supplies and escalating breakeven levels on new placements, sends economic signals to extend days on feed and finish cattle to heavier out-weights. Transitioning back to total beef cattle inventories now, 2024 U.S. beef cow slaughter was down roughly 19 percent from the 2023 total (see Chart 1). That fact leaves one comfortable in saying that breeding female liquidation has finally ended, and USDA’s next annual inventory report (scheduled for publication on Jan. 31, 2025) should show, in the worst case, a stabilization of beef cow numbers. Beyond that, the question mark lies with the necessary ingredient to transition from liquidation CONTINUED ON PAGE 96
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