Tight beef supplies may result in record prices next 3-4 years

Jeff Swenson

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Jeff Swenson

Last week’s original harvest estimate of 629,000 head was revised to 625,000 Monday making it 27,000 lower than the previous week and 33,000 less than the same week last year. Packers are cutting back on production hours ahead of the Holidays with reports that none are planning to operate on Saturday. Carcass weights are also dropping, indicating the supply of fed cattle is current and foreshadowing the tighter beef supplies we will see in 2023.

The Choice beef cutout was $9.20 higher last week finishing Friday at $262.83. CattleFax Chief Executive Officer Blach told attendees of the Beef Industry University in Kansas that he predicts 2023 calf prices to average $225.00/cwt with and range from $200.00 to $250.00/cwt during the year.

In the story released by the Kansas Livestock Association, Blach said “We should not be surprised if demand weakens slightly, but we still look for prices of all classes of cattle to be record high in the next three to four years.”

A presentation by CattleFax will be one of the features at the 2023 Wisconsin Cattlemen’s Winter Conference to be held on February 11 in DeForest. The presentation will inform producers about what to expect in 2023 and important factors that will influence prices and profitability.

Cash hogs hold steady

Cash hog prices were steady last week. The cutout value gained .32 cents ending the week at $87.44. February lean hog futures contracts were higher last week as well, gaining $1.90.

Last week’s estimated harvest was 2.596 million hogs. That beat the previous week by 26,000 and the same week a year ago by 59,000.

The USDA will release a Quarterly Hogs and Pigs report next week. There are mixed opinions on what pork production will do in 2023, but the report will be a preview of what we may expect.

Lamb prices rebound

Cash lamb prices rebounded slightly last week, being called steady to $5.00/cwt higher. The lamb carcass cutout value finished last week at $526.78 and that was $11.55 lower than the previous Friday. Packers were already planning shortened hours this week and winter weather may hamper production even further.

The harvest estimate for last week was 35,000 head, even with the previous week and 4,000 lower than the same week last year. Weakness in wholesale prices can be expected as needs for the Holidays are already in the pipeline.

Retail meat prices mixed

Retail meat prices are mixed compared to this time last year. The composite retail beef price was $7.36/pound in November making it 6.2 percent lower than a year ago. Steak prices are running nearly 11 percent lower, while ground beef is 3 percent higher.

Pork prices continue to work higher at the retail level, averaging $4.90/pound, 2.5 percent higher than November 2021. Chicken has seen the largest increase with prices over 11 percent higher than a year ago.

State livestock market roundup

Fed cattle prices at Wisconsin and surrounding state auction markets were steady to with last week. High-yielding, high-grading cattle brought $125.00 to $148.00/cwt. Groups of high Choice and Prime lots sold from $148.00 to $158.00/cwt with a few reports of some selling higher.

The Holstein steer market steady to higher ranging from $110.00 to $133.00/cwt with high grading Holstein steers selling to $139.00 and a few packages higher. Silage fed, under finished or heavy dairy breed steers brought $75.00 to $110.00/cwt. Dairy x Beef steers were bringing $105.00 to $143.00/cwt.

Cows were mostly steady to higher. A bulk of the cows brought $44.00 to $70.00/cwt with some selling into the low $80.00s. Doubtful health and thin cows were bringing $44.00/cwt and down.

Dairy breed bull calves were steady, bringing $50.00 to $115.00/cwt with heavier, well cared for calves up to $165.00/cwt. Beef and Beef Cross calves were steady, selling to $350.00/cwt.

Market lambs brought $115.00 to $126.00/cwt with a few to $145.00/cwt. There were reports of small groups of lighter weight market lambs selling to $152.00/cwt.