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Spring calf market is heating up

by Wyoming Livestock Roundup

Spring is in the air, and across the auction markets, calf prices are starting to heat up. 

A quick round-up across the U.S. implies many markets are almost $100 per hundredweight (cwt) higher than they were last year at this time. 

Montana auctions are up $90 and $95 per cwt for 400- to 500-weight and 500- to 600-weight steer calves, respectively. South Dakota is toting similar figures, up $115 per cwt from last year in 400- to 500-pound steer calves and $94 per cwt for the next weight class up.

Nebraska is $88 per cwt higher in 500- to 600-pound steer calves, and Georgia is up $94 per cwt.

Southern Plains auctions are showing 400- to 500-pound steers calling for $107 per cwt over 2023, while 500- to 600-pound steers are $83 per cwt higher. 

One of the few exceptions the Livestock Marketing Information Center (LMIC) tracks, although there may be others, is Washington auctions. Prices for 400- to 500-weight steer calves were only four dollars per cwt higher, and 500 to 600 weights were $32 per cwt higher. 

These prices are reflecting the last week of February for auction markets.

Weather pattern 

For many of these, auction prices ended the year slightly below the highs seen over last summer but have taken off since the beginning of 2024. 

LMIC saw a similar pattern across the U.S. last year, but the rate of increase, at least for now, seems quite a bit steeper. 

In 2023, there was a sense of fear regarding whether there would be enough cattle for the supply chain. This drove prices through most of the first half of the year, and optimism stemmed from a break in a three year La Niña weather pattern which had put most of U.S. cattle country in drought at one time or another during those three years. 

The promise of an El Niño and with it, better forage production, had many producers willing to pay up for cattle.

This year, supplies of cattle are even tighter with a smaller calf crop in the wings.

However, there is more uncertainty regarding the weather situation. 

The U.S. Climate Prediction Center has been giving off a few warnings this year that the odds of returning to La Niña conditions this summer are increasing.

On a climate news briefing issued Feb. 8, the National Weather Service Climate Prediction Center estimated a 79 percent chance the U.S. will transition from El Niño to El Niño Southern Oscillation (ENSO) neutral by April through June and gave a 55 percent chance of La Niña developing in June through August. 

Even with the development of La Niña, it does not necessarily guarantee the development of drought, but points to more likely drier weather for the Southern U.S. 

The good news is an El Niño or ENSO-neutral spring will likely be good news for calf prices and a grass fever market will continue to fuel these already high prices. In the event the U.S. remains out of drought, LMIC expects those prices to continue to build into the fall.

However, the caveat is if drought does develop in some parts of the U.S., it could slow down price increases. Tight cattle supplies should ensure any price weakness will be small.

Price outlook

Current LMIC forecasts call for steers in the Southern Plains weighing 500 to 600 pounds will average just about $300 per cwt on an annual basis and will likely set the high for the year in the fourth quarter. 

This is largely due to continued tightening expected across all parts of the cattle supply chain and the demand for fall-weaned calves to be very strong. 

Next year, prices are expected to continue to increase as it seems herd rebuilding will not be able to return quickly. 

Prices may average as high as the mid-$300s per cwt, reaching at times close to $400 per cwt. 

The weather may play a significant role, though, if La Niña returns and the U.S. reverts to intense drought patterns. Drought would likely extend the cattle liquidation phase and thereby extend higher prices for cow/calf producers for future years.

Katelyn McCullock is the director and senior agricultural economist at LMIC. This article was originally published in BEEF Magazine on March 1.

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