2024 Cattle Market Outlook
DR. ANDREW P. GRIFFITH
KNOXVILLE, TENNESSEE
Cattle prices in 2023 exceeded most analysts’ expectations, but the question of what cattle prices will do the next year has found its way back to where it was one year ago. Prices in 2023 for 500 to 600 pound steers in Tennessee were about 35 percent higher than they were in 2022. This was just “slightly” higher than my expectation that cattle prices would increase 7 to 12 percent in 2023 compared to 2022! There is no guarantee with cattle markets in 2024, but it is highly unlikely prices will increase 35 percent year-over-year compared to 2023. In order to come some conclusion on an expectation, it would be beneficial to look at some of the fundamentals that will drive cattle markets one way or the other.
The primary driver of the 2024 cattle market will continue to be the supply side as the beef cow herd and beef heifers held for replacement will show declines in the January 1 cattle inventory report. In order to support this statement, it is important to note beef cow and heifer slaughter rates in 2023. Through the first 46 weeks of 2023, federally inspected heifer slaughter was 2.7 percent lower than the same 46 weeks of 2022, but it was still 2.1 percent higher than the same time period in 2021. Similarly, federally inspected beef cow slaughter the first 46 weeks of 2023 was 12.0 percent lower than 2022 and only 1.3 percent lower than the same weeks of 2021. Clearly, it takes a higher degree of math to discern cattle inventory will once again decline year-over-year, but it is a good thing we employ people who can do such arithmetic.
Shifting gears to a seemingly unrelated topic, feeder cattle futures in 2023 ran wild. For simplicity, it is appropriate to use the January 2024 feeder cattle contract, which opened on January 26th at $210.65 per hundredweight. The contract then spent the next eight months increasing and found itself just above $268 on September 15th, which is nearly a $58 per hundredweight price increase. Despite the eight month trek to $268, it took less than three months for the same contract price to find itself back at $210 on December 7th. If this type of price movement does not demonstrate confusion among market participants then bears do not poop in the woods and moonshine is not made there either.
The supply side of the cattle market is extremely bullish, but the demand side of the beef equation is the concern for many. Wholesale Choice boxed beef prices floundered around $300 per hundredweight from the middle of summer through the end of the year with little to no support leading up to the end of the year holidays. Typically, there is some support for the rib primal, which will pull boxed beef prices seasonally higher. However, the support for such price improvement was not as obvious as is typical. Consumers continue to come under pressure from inflation and interest rates, which is pulling disposable income away from certain goods. The ability of the beef industry to keep consumers interested in beef will be important in 2024.
This brings the conversation to the topic of price expectations for cattle in 2024. Given the 35 percent increase in prices of 500 to 600 pound steers in Tennessee from 2022 to 2023, a much more modest increase is expected in 2024 when compared to 2023. The softness in the cattle market in late 2023 will eventually subside as soon as market participants have a clearer picture of cattle supply. Thus, the expectation is for 500 to 600 pound steer prices to increase three to five percent in 2024, which will be a price around $235 per hundredweight. Load lots of 800 pound steers will likely average in the $235 to $240 price range in the current marketing year. Slaughter cow prices increased nearly 22 percent in 2023 compared to 2022. It is unlikely prices will increase that much again in 2024, but the price of slaughter cows will be higher in 2024 compared to 2023. It would not be out of the question to see an increase of 10 percent, which would put the average slaughter cow price around $105 per hundredweight. ∆
DR. ANDREW P. GRIFFITH: University of Tennessee