This is an abridged version of the beef outlook for Q3 2024 from Terrain, our service for agricultural insights. For the full text of this article, visit terrainag.com.
Carcass weights began to climb during the first quarter of 2024 as Midwest cattle feeders held cattle to replace the weight lost during severe weather and poor pen conditions in January and February. The rebound of carcass weights at the end of the first quarter has extended well into the second quarter, resulting in record-high monthly average fed cattle weights in April and May.
Despite these record-high carcass weights, I am optimistic that fed cattle prices will remain resilient the rest of this year. Weights will likely tamp down Q3 prices only slightly before tighter supplies help prices in the fourth quarter retest spring highs.
Price Forecasts
For Q3 2024, I expect fed cattle prices to average between $185/cwt and $190/cwt, which is about $5/cwt lower than my previous forecast, largely because of weights (see Chart). Looking ahead to Q4 2024, my forecast for available fed cattle supplies tightens further, leading to an early-Q4 retest of the spring highs in the low-$190s/cwt, with the potential to reach $200/cwt during the holiday demand period. Declining grain costs could push some cattle to $150/head to $200/head profits.
Optimism for continued profits for the second half of 2024 combined with 740,000 fewer cattle left outside feedlots on May 1 versus a year earlier will well support feeder cattle and calf prices. Replacement cattle will be in shorter supply the back half of the year versus the first half of 2024.
For perspective, placements were down 80,000 head, on average, in each month from January to April on a YOY basis. The USDA’s January 1 Cattle Inventory report showed that feeder cattle and calf supplies outside feedlots were down 1.06 million head versus January 1, 2023. I expect that the average decline in placements for May through December will be closer to 92,500 head per month.
I forecast the CME Feeder Cattle Index to spend the bulk of Q3 and Q4 2024 in the $275/cwt to $285/cwt range. I expect Oklahoma City 400- to 500-pound steer calves to average about $360/cwt, with an approximate range of plus or minus $10, for Q3 and early Q4.
During November and December, supplies for light calves destined for turnout on small grain pastures will decline further as heifer retention for cow herd expansion begins. This has pushed my November/ December forecast for these light steers to $380/cwt to $400/cwt.
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