With the release of the January 1 cattle inventory report, there have been several questions concerning what it means for cattle markets the next several years. If the inventory report is paired with record low hay stocks and high feed prices then some longer-term implications are apparent.

The first observation is that cattle prices are likely to increase and be strong for at least three years. However, prices may not escalate as quickly as some may think, because many heifers and cows will continue to enter the slaughter mix due to limited feed resources and the uncertainty of being able to feed those animals through the remainder of the winter and early spring. With many heifers still destined for the feedlot, it will likely be the second half of the year before any type of herd expansion can begin.

Feeder cattle prices will escalate quickly once heifer retention begins, but the market is still several months away from this. Delayed heifer retention this year should result in strong feeder cattle prices in both 2024 and 2025.