Yesterday, September 18, CattleFax put on a Trends+ Cow-Calf webinar to discuss feedstuff markets and the cattle market outlook for the remainder of 2024 and early 2025. Senior Farm and Ranch Broadcaster Ron Hays is featuring some of the comments from CattleFax Market Analyst Matt McQuagge on commercial cow slaughter, bred cow values, and a strategy for cull cows for producers to consider.
During the webinar, McQuagge talked about commercial cow slaughter trends in 2024. He said that the count was down from a year ago numbers and expects close to a million head of commercial cows to have been slaughtered by the end of the year. To date, beef cows are down 375,000 head, a 16 percent reduction, and dairy cows are down 300,000 head, a 14 percent reduction.
“As we look at these decreases in numbers, this is translating to record high utility cow prices,” McQuagge said. “So, within this year, we expect prices to average around one twenty-five per hundredweight for a utility grade cow. The season will decline into the October-November-December timeframe. We expect prices to end the year, or to find support, around that one twenty per hundredweight level, so, prices should come in and average around one thirty-five in the coming year.”
He reiterated that the decline in harvest numbers and the increase in demand for ground beef have benefited prices. He recommends holding cull cows over to 2025 to take advantage of the projected high prices.
“Using a simple model we built, we evaluated the values of cows retained in November and held through February. It also assumed a little bit of weight gain through that winter feeding timeframe and also included items like vet/meds, interest expense, and a little bit of death loss. It shows us that, this winter, there is a lot of value to be gained by holding on to these cows if you have access to winter grazing,” McQuagge explained. “Right now, the market is implying a break-even cost of gain of around $1.17 per pound for this scenario.”
He cautioned that because his figures were based on a model, it could vary greatly between operations. He recommends a personal budget analysis for interested producers, as keeping these cows for another 100 days does create some risk exposure. He said, “Even if this is just done on a handful of thinner or lighter fleshed cows that have more opportunity for growth, there is potential to add quite a bit of value to the bottom line.”
Shifting the conversation to bred cows, McQuagge said, “Looking at this long-term spread between bred cow prices and calf prices, or 550-pound steer prices, these tend to track very closely together across time. You can see the gap widened some over the past ten years as interest rates stabilized at lower levels and then tightened up in the past few years. As interest rates increased again, we have to remember that our bred cows are our fixed assets in the cow herd, so there are some financial or interest-attached considerations there that aren’t necessarily in play when it comes to calves.”
According to McQuagge, this lets producers know that as much as calves have grown, there is still room for bred cow values to increase even more through the next few years. Year to date, bred cows are bringing around $2,700 per head. Bred heifers are just above that, and pairs bring around $3,400 per head. Projected figures show these values to increase in the coming years.
When comparing bred cows to five-weight steers, McQuagge realized that the bigger picture was in the comparison of the price of bred cows today versus future calves. A model was created to track the number of calves it takes to break even on a female, and the long-term average is around 4.5 calves, noting that the bottom axis is the year of the first calf.
“According to the model, heifers retained in 2024 would have their first calf in 2026,” he described. “Right now, despite high values for females, we think that will be offset enough by future calf prices to where females are still a good value.”
Looking ahead to heifers retained in 2025, it will start to get a little more expensive. While retention is still expected to increase slightly next year, producers will have to get a few more calves to make that female pay for herself. The projected low speed of herd expansion will also limit the speed of price growth and reductions, as was seen in 2014-2015, when the value of females increased significantly as calf prices decreased significantly so many operations were stuck with females that could not pay for themselves.
“This means that there are some opportunities here moving forward, and we still have a little bit more room there,” McQuagge said. “This also suggests that operations that have a little bit more grazing and the option to retain a few more heifers with the goal of selling them could benefit greatly in the next year as well.”
The CattleFax organization is based out of Denver, Colorado, and more information, including the entire webinar video to be posted within the next few days, can be found on the website.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR at the top of the story for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
