Analysis: Cattle prices rise but ranchers face challenges
At first glance, 2022 cattle prices are up, which appears to be good news for farmers and ranchers. In fact, slaughter steer prices are 17.5% above 2021 prices. But a new Market Intel report from the American Farm Bureau Federation offers a more cautionary picture. “Even with high prices,” the report noted, “farmers and ranchers will travel a rocky road to prof- itability, paved with inflation and higher input costs in 2022.” According to the analysis, the beef cattle industry is entering the contraction por- tion of the cattle cycle. The U.S. Department of Agriculture’s Annual Cattle Inventory Report published estimates that overall inventory on Jan. 1, was down 2% or 1,887,700 head from 2021. The Farm Bureau report noted that cat- tle inventory figure is key for the market outlook and the cattle cycle, an index that tracks waves of expansion and contraction and provides clues on farmers’ and ranch- ers’ perceptions on the profitability of the beef cattle industry. Commercial cattle slaughter for April was 2.81 million head, down slightly from 2021,according to USDA figures. Steer slaughter was 1.33 million, 4% lower than 2021. Heifer slaughter for the month of April came in at 825,200, 0.05% lower than
this time in 2021. Cow slaughter for the month of March came in at 640,382, 7% higher than the same time in 2021. Cows and heifers make up the breed- ing herd, which is responsible for supply- ing the calves entering the cattle inven- tory at any point during the cattle cycle. Increased cow and heifer slaughter will result in a smaller calf crop and inventory in the upcoming months of the cattle cycle, the report said. The Farm Bureau analysis said it is nat- ural to conclude that future inventory will be down, as the calf crop, cow and heifer inventory are all declining. However, the report noted that many areas are experi- encing extreme drought, and it is common to remove grazing animals from forage ear- ly for placement into feedlots. The movement of cattle from grazing to feedlot placement or vice versa can throw off inventory numbers, the report said. According to the USDA Cattle on Feed survey, the estimated 12 million cattle on feed as of May 1 was up 2% from a year ago. The total number of cattle placed in feed- lots is 1.81 million head, down 1% from last year. Meanwhile, USDA forecasts 2022 total red meat and poultry consumption at 222.7
A Market Intel report from the American Farm Bureau Federation concludes that the beef cattle in- dustry is entering a contraction cycle,as farmers and ranchers face inflation and higher input costs.
pounds per capita, down from 224.2 pounds in 2021. The per capita red meat and poultry disappearance is forecast to decrease. USDA defines per capita meat disap- pearance as the measure of the supply available for use in domestic markets, in- cluding fresh and processed meats sold. When supply drops, beef prices may rise. If beef prices rise, consumer demand for beef may fall, the Market Intel report noted. Domestic imports are an important factor in evaluating U.S. demand for beef, the report said. USDA reports U.S. beef
and veal imports reached 353.77 million pounds in March, 29% higher than the same time in 2021. The greatest increase in U.S. imports is from Brazil. Record high U.S. beef prices and drought conditions in traditional im- port countries such as Australia are key motivators for this increase, the Market Intel report said. Another reason the U.S. has been importing from Brazil is China, one of
See CATTLE, Page 14
June 8, 2022 Ag Alert 13
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