Recent trends in the cattle market have shown a notable increase in sales, driven by stronger cattle prices and environmental factors. Cattle producers, particularly in the United States, have been actively selling steers and heifers.
This surge in sales is partly attributed to capitalising on the higher prices and, in some instances, necessitated by ongoing drought conditions, which have limited pasture and hay availability.
Since Labor Day, there has been a 5.6% increase in national feeder cattle volumes (encompassing auction, direct, and video/internet sales) compared to last year, with a significant spike in September. This rise contributed to the large number of feedlot placements observed that month.
Although October saw a 2.4% increase in total volume, there was a downturn towards the end of October and early November. In Oklahoma, feeder cattle auction volumes have decreased by 13.7% year over year this fall. Despite this, indications suggest another month of substantial placements in the upcoming Cattle on Feed report.
Prices for larger feeder cattle (weighing 600 pounds and above) have dropped by approximately 9-10% since September, largely due to a significant market correction in Feeder and Live cattle futures. However, these prices remain 33-35% higher than the same period last year.
In Oklahoma, stocker calf prices have remained robust this fall, bolstered by recent rainfall and improved wheat pasture prospects. Producers are preparing for wheat grazing, albeit later than usual in many cases.
The latest crop progress report indicates that Oklahoma wheat planting and emergence are slightly behind the average pace, with the crop rated 49% good to excellent. Stocker steer prices in Oklahoma are averaging 45-50% higher year over year.
The strong feeder prices are also influencing live cattle imports. Mexican feeder cattle imports, which were at their lowest since 2008 last year, have risen sharply in 2023, with a 45.9% increase from January to September compared to last year.
However, this figure is still 3.6% lower than the 2017-2021 average for the first nine months of the year. Canadian feeder cattle imports have decreased by 24.6% year to date from last year and are 35.7% below the 2017-2021 average level.
Nationally, beef cow slaughter has decreased by 12.6% year over year for the year to date. However, the decline has been less pronounced in the last 8 weeks, with only an 8.4% decrease. The current rate of beef cow slaughter suggests a 2023 herd culling rate of 12%, which is above the long-term average of about 10%, indicating further herd liquidation.
Overall, the data from feeder marketings, feedlot placements, and slaughter rates collectively suggest that the industry is continuing to remove animals from the system, a trend indicative of ongoing liquidation.
As a result, cattle numbers are expected to tighten further in 2024. When heifer retention and herd rebuilding commence, the tightening of cattle numbers is likely to accelerate rapidly.
