COVER STORY
“With what we’re seeing, prices are expected to be higher for the next couple of years.” – David Anderson
Thankfully, he points out that beef production per animal has increased substantially due to better genetics and production capabilities, or numbers would be lower. Anderson says high feed costs have come down and could ease a little more heading into next year. Southern corn cash prices have been more than $6.50 per bushel nearly all year, and topped $7 and even $7.50 through much of April and in a spike in June. However, Corn Belt rains helped drop corn prices to below $6, $1.50 a bushel or lower than a year ago.“We can expect corn prices to go even lower in 2024,” Anderson says, due to increased corn stocks following this year’s harvest.“Even with a dry Midwest, a large corn crop is projected.” Near $450 per Head Profit for Cow-Calf Operators Anderson sees a third straight year of profits for cow-calf producers after four out of five years of losses. And profits could be huge.“Estimates by the USDA and LMIC project an average return for 2024 of more than $450 per head,” he
says, compared to $175-plus per head profit this year and just under $50 in 2022.” High profits should carry over to stocker operators, but cattle feeders could see margins pressured due to higher feeder cattle costs. Anderson adds that packers, which capitalized on their supply and demand advantages and massive profits during the pandemic, will likely continue to see tighter margins due to tighter cattle supplies. What Is the Price Limit for Consumers? “We’re going to test high prices paid by consumers,” Anderson says.“Even if they have money in their pocket, there’s a point to where consumers will look at the cost of that ribeye and say ‘I refuse to pay that.’” He points out that Bureau of Labor statistics indicate from 2017 through 2021, the average retail price for Choice
beef ranged from just less than $6 per pound to about $6.50. In 2022, it stayed in the neighborhood of $7.50 to $7.70. For 2023, it surged to more than $8.30 by mid-summer. “Even though we’re going to test demand, there are indications that U.S. high-quality beef will continue to be in demand,” Anderson says. Of course, other than contracts already in place, nothing can be chiseled in stone when it comes to future cattle prices. Too many things can happen that can impact markets. Anderson emphasizes the need for producers to consider using price risk management. He suggests that Livestock Risk Protection (LRP) programs provide tools that are similar to cattle futures and futures options to help manage markets. “LRP offers a real opportunity to lock in these profitable prices and take away downside risks,” he says.
Are fats staring at even higher prices?
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