– Dr. Kenny Burdine, Extension Professor, Livestock Marketing, University of Kentucky

Feeder cattle prices have been trending down since mid-September and last week was especially frustrating for cattle producers. As I write this on the afternoon of Monday November 13, CME© feeder cattle futures are down $30-$40 per cwt from their September highs, depending on the contract month one is looking at. The chart below shows the change in closing prices from October 6^th to November 10^th (Friday). Cash feeder cattle prices have fallen during this time, but not by as much. Here in Kentucky, there also seems to be a lot of variation in local price levels, which suggests that markets have gotten pickier over the last several weeks. A full week of sales this week should tell us more as the markets process everything that has occurred recently.

While not scientific, it has been my observation that it is hard to build much momentum in feeder cattle markets this time of year. Prices tend to decline seasonally during fall, and the markets seem to seize negative news because of that. Swings in weather and temperatures, along with increased health issues as we move towards winter, don’t help either. There has been some Continue reading Reflecting on a Tough Couple of Months in the Cattle Markets →

– Stephen R. Koontz, Department of Agricultural and Resource Economics, Colorado State University

Cattle markets continue the decline from September into November.  Much of this movement lower could and should have been anticipated.  The underlying supply and demand fundamentals did not support year-long and continuing higher movements in cattle prices.  Supplies are tightening and demand has been strong but the movement to record high prices is well in advance of that which can reasonably be supported by fundamentals.

Packer margins have spent much of the year at levels that are unlikely to cover costs – or much of costs – there may have been only a single month with some positive return.  Even with strong beef prices, fed cattle were relatively too strong.  The cash market has as of yet not followed live cattle futures lower.  But the underlying fundamentals make that likely.  The boxed beef composite value has held at levels modestly above $3 per pound.  It will also be interesting to watch the beef market react to holiday demands.  For example, do Continue reading Continued Market Retreat →

– Matthew Diersen, Risk & Business Management Specialist, Ness School of Management & Economics, South Dakota State University

This insurance product is gaining popularity.

Pasture, Rangeland, and Forage Rainfall Index insurance (PRF) continues to gain popularity. PRF is insurance against low precipitation that may be correlated with reduced feed production. PRF has subsidized premiums that cover either haying or grazing with a scaler to adjust productivity for a specific sub-county region. The deadline to purchase the coverage for calendar year 2024 is December 1, 2023. Here are some trends related to this product.

Nationally, the acres insured by PRF have grown rapidly from about 50 million acres in 2016 to almost 300 million acres in 2023. The level is beginning to approach the upper bound for all pasture and forage acres, which was less than 500 million acres according to the 2017 Census of Agriculture. For 2023 the coverage or insured amount was just below $6 billion. The acres covered are Continue reading PRF Trends →

– James Mitchell, Livestock Marketing Specialist, University of Arkansas

A lot has been said about tight cattle supplies in 2023. The January 2023 Cattle Inventory report estimated total cattle supplies at 89.27 million head, down 3 percent year over year but still 1 percent above the previous low in 2014. The result of tight cattle supplies across all sectors of the beef cattle industry has been historically high prices. Through October, prices for a 400-500-pound steer calf in Arkansas average $269 per hundredweight. This is more than $90 per hundredweight higher than in October 2022 when prices averaged $177 per hundredweight. Prices are high across weight classes in Arkansas. In October, 500-600-pound stocker cattle prices averaged $252 per hundredweight, and 700-800-pound feeder cattle prices averaged $220 per hundredweight, 52 percent and 47 percent higher year over year, respectively.

It is hard not to compare the current situation to 2014, when total cattle inventories were 88.24 million head. Cattle prices in 2014 set records. However, many of us are also keenly aware of 2015 and 2016. Herd expansion occurred rapidly. By January 2016, total cattle inventories were Continue reading Why is This Time Different? →

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

The cost of borrowing money is becoming increasingly expensive in today’s environment. Many agricultural loan rates are between 7.5 percent and 8.5 percent, which is double what the rate was two years ago. The ratcheting up of rates has slowed tremendously, but that does not mean interest rates will not be increased in the coming years.

There are many operations that are not in a financial situation to reduce borrowing needs. However, there are some operations that could use some capital on hand for operating money and reduce borrowed capital. The use of available cash could reduce costs tremendously given the current interest rate environment. This statement is not to insinuate using all cash on hand in place of borrowing money, but rather to use a portion of the available capital to replace some borrowing.

For those who do not have cash on hand to replace a percentage of borrowed capital, it would be advantageous to establish a goal of putting back some cash in the coming years for times such as this.