The feeder cattle market has really flexed its muscles as we have moved through summer. The October CME© feeder cattle futures contract has increased by more than $10 per cwt since May and this can been seen in the market for heavy feeder cattle. Heavy feeders typically make their highs around this time of year, but calf markets are increasing counter-seasonally. A strong calf market going into fall is a good sign for cow-calf operators that calve in the spring and will be marketing calves in the coming months. The chart below shows steer calf prices in the Southern Plains, which have been increasing through July and August.

It is becoming more apparent that the supply of calves is going to be very tight this fall. Beef cow slaughter levels have been discussed several times in this newsletter and remain 14% above 2021 levels. Last week, Josh wrote about high placement levels of light weight feeders, which has been another trend due to dry conditions in much of the country. Given the continued reduction in the size of the beef cow herd, this was likely to be a smaller fall calf run had weather not been a challenge. But, when combining that with the drought implications, fundamentals are setting up for a seller’s market for feeder calves.

Related:Rabobank beef report: Beef market is strong

I also wanted to take a quick look at beef export levels as those have not gotten a lot of attention in recent months (see chart below). Through the first six months of 2022, beef exports have been 7% higher than last year. Also remember that 2021 was a record year for US beef exports. At the start of 2022, most expected beef export levels to decline, mostly due to an expected decrease in beef production. However, the combination of high cow slaughter and early placement of cattle on feed, has kept beef production higher than expected. While exports are expected to slow in the 4^th quarter as beef production decreases, it does appear likely that a new record for beef exports will be set in 2022.

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