Senior Farm and Ranch Broadcaster Ron Hays is visiting with senior beef and cattle market research analyst at Rabo AgriFinance, Lance Zimmerman, about movement in the cattle markets.
Zimmerman said the market has been in a downtrend since the early September highs.
“Obviously, the one that we were all talking about the most is the depreciation that happened from a month ago,” Zimmerman said.
Longer-term, Zimmerman said he believes the break was good for the market.
“We were at a point where feeder cattle were incredibly expensive to bring in from a break-even standpoint, and packers were awfully tight in terms of, ‘how do we hedge some of these cattle we know are going to be coming to us throughout the rest of the winter and into the spring,’” Zimmerman said. “This break gives everybody an opportunity, where they may not be able to manage their sell-side risk, but they can manage their buy-side risk again, and I think that is awfully encouraging.”
While the futures market is volatile, Zimmerman said it has been in a position for quite a while of making the cash market prove that the supplies were tighter, and demand is better.
“We did that throughout the summer, and I really do feel that we will do that again as we navigate through the next 12 to 18 months, even if we have to navigate through some chaos short term,” Zimmerman said.
While everyone lost a little bit on this break in the cattle-producing segments, Zimmerman said discouragement was seen the most within the cow-calf producers.
“That is the one we can least afford to lose is optimism right now as an industry,” Zimmerman said. “As you know, we have been through four years now of cow herd liquidation. We need some optimism in that segment to continue to grow. We are still not at a point where we are retaining heifers or even really tapping the breaks hard on beef cow slaughter. When you have calf values start coming under pressure again because these deferred futures are coming under pressure as well, that tends to hurt.”
Because of the percentage of heifers that are selling across feeder cattle and calf sales right now, Zimmerman said expansion most likely will not happen until 2024.
“We are going to be holding out, hoping that cow slaughter really slows down as we go through next spring and summer, and then looking to next fall calf crop to see if we can start retaining a higher percentage of heifers back on operations during that weaning time,” Zimmerman said.
Looking into 2025, Zimmerman said there is a chance of small beef cow herd numbers as well.
“In order for that to grow, we really need to see heifer retention happen in the second half of this year, and that is not going to happen,” Zimmerman said. “We will be in a situation where our beef cow number will be in decline of probably 500 to 1 million head year-over-year again on this upcoming report.”
Hopefully, Zimmerman said looking into 2026 and 2027, some increases in beef cow herd numbers will be seen.
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