Current Cattle Markets: Livestock marketing expert offers insight into current cattle market conditions, potential challenges and risk protection

The biannual Southeast Wyoming Beef Symposium and Trade Show, a premier event bringing together producers and industry professionals for knowledge exchange, professional development and networking opportunities, was held at the Rendezvous Center in Torrington on Nov. 19.

Among an impressive lineup of speakers covering everything from backgrounding, heifer development and direct-to-consumer marketing, University of Wyoming Livestock Production and Marketing Specialist Rob Ziegler discussed the cattle market outlook and provided information on livestock risk protection. 

Cattle market outlook

To begin, Ziegler noted the beef cattle inventory, at 28.2 million head, is the lowest it has been since 1941 and will likely not rebound to the 41 million head seen at the peak of the last cattle cycle for several reasons. 

First, he mentioned the national cow herd has been in a steady decline and advancements in genetics have created bigger cattle with the potential to put on more weight now than they have in the past.

“The other thing I would like to point out is I don’t think this particular rebuild will be as rapid as the one we saw in 2014-15,” he said, noting current markets may be attractive for older producers on the verge of retirement but they create a large capital barrier to entry for young producers trying to get into the business. 

As expected, less cows means less feeder cattle, and when supplies are short, prices tend to go up. 

“In 2023, we were on an upward trend, which ebbed and flowed on the calf side of things until the peak in 2024,” Ziegler said. 

He also noted, when calves are weaned and shipped in October, prices tend to go down. However, this year, calf prices went up during September and October. 

Likewise, 2024 cull cow prices have increased from the $60 per hundredweight (cwt) seen in 2020. 

“Average prices in October across Wyoming auctions were pretty similar to what we saw in the last cow cycle in 2014-15,” Ziegler said. “When demand increases for bred cows, I think there will be a lot of upside potential on these prices.”

“The other thing I want to mention is this represents an average bred cow price, not just for Wyoming but for surrounding states as well, so with Wyoming producers facing drought this summer – and potentially devastating wildfires – they might find themselves in a position to liquidate, and there may be an economic advantage to going to a surrounding state,” he added. 

“Keep in mind, there are some legalities when taking breeding females across state lines,” he continued. “And on the flip side, there may be an advantage to going outside of the state to buy cattle.”

When it comes to rebuilding the nation’s cattle herd, Ziegler reiterated he believes the rebuilding stage will be more prolonged during this cattle cycle than the last. 

He explained the October heifer on feed report pegs the percentage of heifers on feed around 40 percent. 

“When this gets below the 36.5 percent mark, it will be a signal that producers are thinking about rebuilding their herd,” he shared.

However, as of now, there is no indication producers are retaining replacement heifers, likely waiting to see another year of good returns before they are confident in rebuilding, Ziegler said.

Beef prices and input costs

Next, Ziegler shared, while the Livestock Marketing Information Center (LMIC) predicted a 1.5 percent decline in 2024 total beef production, a report published by the U.S. Department of Agriculture in October pointed to production being on par or slightly above 2023, likely due to larger carcass weights. 

Additionally, per capita consumption is forecast 0.8 percent higher for 2024 but 3.5 percent lower into 2025-26. Ziegler noted this is about four pounds less per capita than today’s numbers, which is cause for some concern. 

With this, live steer prices in the five-state region are forecast to land between $186 and $191 per cwt, then trend upwards to $196 and $212 per cwt into 2026.

Ziegler noted prices for seven- to eight-weight and five-weight steers are expected to do the same, with 700- to 800-pounders predicted to round out the remainder of 2024 at $255 to $260 per cwt, then increase in 2026, while 500-pounders will finish the year around $310 per cwt and move to $320 per cwt in 2026. 

Although live cattle prices appear promising, Ziegler pointed out it is also important to consider input costs, which have certainly gone up in recent years. 

He cited data from the LMIC showing producers spent an estimated $878 per cow in 2020, and while this number appears to have fallen to $830 per cow in 2024, other reports show it is much higher, nearing around $1,100. 

“Some of Kansas State University’s (KSU) data shows cash costs and fixed costs, and KSU estimates an additional $450 in fixed costs,” Ziegler said. “When we add $450 to $1,100, we’re just over to $1,500 and a calf is worth around $1,800. The output in these prices is really shiny looking, but the margins might not be the same as we saw in the last cycle.”

Ziegler also shared data showing cow/calf producers made an estimated $534 dollars per head in 2014, rising to $621 per head in 2024. But, it is important to note inflation increased during this time as well, with periods of inflation topping nine percent. 

“Although it looks glamorous on the surface, I caution producers because the cost to do business now is more than what it was 10 years ago,” he stated. “The other thing I will point out is these numbers are averages and they mask a lot of variation, so what it takes me to run a cow is a lot different than what it will take someone else.” 

Livestock risk protection

To round out his presentation, Ziegler discussed livestock risk protection. 

“I would like to remind you of the three disclaimers I have,” he said. “First, there are several market risk management strategies available, whether it is hedging or using other options, but this just so happens to be a tool gaining a lot of attraction recently so I wanted to deliver some content on it.”

Second, Ziegler noted risk tolerance and risk variability is highly subjective, and third, he shared he believes investing in a risk management strategy is no different than buying car insurance for a vehicle. 

“If I knew with 100 percent certainty I would never get in a wreck, I wouldn’t buy the insurance. But I don’t know, and livestock risk protection is a safety net to have in place when a potential price wreck occurs,” he stated. 

Ziegler pointed out livestock risk protection must be purchased through a risk management agency approved vendor and requires a lengthy, up-front application process. 

“Coverage prices range from 70 to 100 percent, and one of the beauties of this is producers can insure one animal up to 25,000 head per producer per year,” he said. “Coverage length ranges from 13 to 52 weeks and they do not have to be consecutive, the idea being if a producer has a specific target date in mind, there should be a policy close to what they need.” 

For feeder cattle, there are two weight ranges – 100- to 600-pounders and 600- to 1,000-pounders. On the finishing side, the weight range is 1,000 to 1,600 pounds. 

“Producers must own cattle 60 days prior to selling them, and premiums are due 30 days after the contract ends,” Ziegler explained. 

Ziegler also said he believes livestock risk protection has gained so much attention in recent years because premiums are subsidized, and for young, beginning farmers and ranchers, the program includes an additional 10 percent subsidy. 

Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.