Cattle Outlook

Slow Pace of Slaughter and Heavier Weights in Early 2024

The latest Cattle on Feed report, published by USDA, National Agricultural Statistics Service (NASS), showed a March 1 feedlot inventory of 11.838 million head, 1 percent above 11.685million head in the same month last year. After factoring in an extra weekday for Leap Year, feedlot net placements in February were 10 percent higher year over year at 1.834 million head, higher than analysts projected. However, when factoring in a year-over-year decline in January, the total volume of net placements for January and February combined was only 0.2 percent higher than the same period last year. 

Marketings in February were 1.793 million head, up over 3 percent year over year, though on a weekday basis the pace was just under 2 percent behind last year. The slower pace of marketings has extended into March based on fed cattle slaughter estimates. Based on USDA, Agricultural Marketing Service (AMS) reports of actual slaughter under federal inspection and estimated daily livestock slaughter, the pace of fed cattle slaughter in March was about 5 percent behind last year, suggesting lower year-over-year marketings for the month as well.This is a reduction from last month’s expectations. Cattle formerly expected to be marketed in the first quarter are now anticipated to shift to the outlying quarters. 

Further, cow slaughter slowed more than anticipated from last month. Some of the decline in first-quarter cow slaughter is expected to be partly offset by higher expected slaughter in late 2024. The pace of cow slaughter in second-half 2024 is expected to be above its projection last month as higher cull cow prices are forecast and expected to draw more beef cows into the slaughter mix.

Partly reflecting the slower pace of slaughter, for the week ending March 23rd, carcass weights for steers and heifers are at record levels for this time of year. The year began with weights at or near record levels before rapidly declining, likely due to winter weather inhibiting feed efficiency. The charts below show carcass weights for steers and heifers through the first 12 weeks of the year for 2023, 2024, and the minimum and maximum of prices in 2014–23. In early February, weights reversed their downward trend and have since climbed to record levels in March. This increase is likely the result of feedlots attempting to maximize poundage per animal as packers reduced slaughter schedules in the first quarter and pressured prices for fed cattle. Although weights will decline seasonally in the second quarter, they are expected to be above year-ago levels for the quarter.

Heavier Cattle and a Shift in Slaughter Raise 2024 Production

The forecast for first-quarter beef production is lowered 35 million pounds, primarily based on AMS reports of actual slaughter under federal inspection showing a slower pace of fed cattle and cow slaughter than previously expected. Partly offsetting the decline in estimated slaughter are much heavier steer and heifer carcass weights than anticipated.

The outlook for second-quarter beef production partly reflects a temporal shift of fed cattle slaughter out of the first quarter and into the second quarter. In addition to the expectation of a more rapid pace of second-quarter marketings given the number of cattle on feed over 150 days, relatively heavy steer and heifer carcass weights in the first quarter are expected to carry over into the second quarter. As a result, second-quarter 2024 beef production is raised 65 million pounds from last month’s forecast.

Third-quarter projections are raised 55 million pounds on higher expected fed cattle and cow slaughter. This increase in fed cattle slaughter stems from higher expected marketings, raised on more anticipated first-quarter placements than last month. In the fourth quarter, production is forecast up 45 million pounds as more fed cattle are expected to be marketed then as they are expected to remain on feed for longer, along with higher cull cow slaughter. The outlook for 2024 beef production is raised by 130 million pounds to 26.455 billion pounds.

Cattle Prices Dip but Tight Supplies Remain Supportive

In March, the weighted-average price for 750–800 pound feeder steers at the Oklahoma City National Stockyards was $252.09 per hundredweight (cwt), more than $64 above March 2023. The feeder steer price reported on April 8 reached $244.41 per cwt, about $50 above the same week last year. Based on April weekly price data and stronger first-quarter placements that leave fewer calves available for placement in the second quarter, the second-quarter forecast is raised by $3 to $250.00 per cwt. Prices in late 2024 are unchanged from last month, which equates to an annual feeder steer price of $254.50 per cwt, a 16-percent increase from last year.

Fed steers in the 5-area marketing region2 averaged $187.55 per cwt in March, $22 above 2023. To date, prices have followed seasonal patterns, as indicated by the 20-year index in the chart below, which steadily climbed through most of the first quarter. First-quarter prices peaked in the week ending March 24 at $189.56 per cwt, after which they declined almost $6 over the following 3 weeks.

Despite concerns in the futures market, cash prices remain strong and prices may have peaked sooner than normal, but fundamentals remain for slaughter to increase in the second quarter.  Based on current prices and expectations of relative strength in wholesale beef prices and declining supplies of fed cattle, the second-quarter price forecast for fed steers is raised $2 from last month’s forecast to $185.00. Compared to last month, more cattle are expected to be pulled out of feedlots in late 2024. Subsequently, third- and fourth-quarter price projections are also raised $2 to $184.00 and $4 to $190.00, respectively. Overall, the annual price is forecast at $185.00, more than 5 percent above 2023.