Prices for calves and feeder cattle this last quarter of 2013 reflect what producers can expect next year, says Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in his weekly market comments.

“Feeder cattle prices have strengthened this fall to the highest levels of the year. Heavy feeder prices are at record levels and, while calf prices have not quite exceeded the spring 2012 record price levels, they surely will in the spring of 2013, barring something unforeseen,” Peel says.
 
Cattle supply relative to demand, coupled with declining feed costs, explain plenty of the counter-seasonal price rally.

Subscribe now to Cow-Calf Weekly to get the latest industry research and information in your inbox every Friday!

“Feeder supplies are no doubt tightening this fall with a smaller 2013 calf crop, fewer feeder cattle imports in 2013 and accelerating replacement heifer demand this fall,” Peel explains. “The 2014 calf crop will be as small, or smaller, than this year; feeder imports are likely to remain low; and replacement heifer demand will remain very strong as long as forage conditions are favorable.”

“Because of drought impacts on available feed sources, relatively few heifers were likely to have been retained from the 2012 calf crop; more will be retained from the 2013 and subsequent calf crops unless drought again becomes a concern,” say analysts with USDA’s Economic Research Service in the November Livestock, Dairy and Poultry Outlook. “Heifers retained from the 2012 crop would have been bred this past summer and will calve during 2014. Most of those calves will grow as stockers into 2015, will likely be placed on feed sometime after the first quarter of 2015, and will begin going to slaughter in the last half of 2015. However, they will likely not add much to total beef supplies due to the relatively small size of the calf crop from which they came.”

According to Peel, cattle slaughter is 1.7% lower for the year, compared to the same time a year ago, but it is down an average of 3.6% in the last four weeks. Likewise, beef production is down 1.1% year-to-date, but declined an average of 2.9% in the last four weeks.

For 2014, Peel says cattle slaughter is expected to decrease roughly 7% year-over-year. Expectations are for beef production to be 6.5% less.

“Choice boxed beef prices have averaged above $200/cwt. for the last four weeks and fed cattle prices have averaged above $130/cwt. for the same period,” Peel says. “Both of these prices could average at or above these levels for the entire year of 2014, with spring peaks of $215/cwt. or higher for Choice boxed beef, and fed cattle prices approaching $140/cwt. for a spring top. All eyes will be on the demand side as the supply side of these markets will certainly support even higher prices than these if demand is sufficient.”

You might also like:

5 Simple Steps To Up Your Cow Herd's Profitability

100+ Breathtaking Photos Of Winter On The Ranch

Here's Why You Should Winter Calves With Their Mamas

3 Lessons From A Greenpeace Dropout

Will Cattle Feeding Profits Be Short-Lived?

EPA Proposes Reduced Ethanol Requirement