TIGHTER SUPPLIES ALL AROUND
By Matthew McQuagge CattleFax Analyst
MARKET UPDATE
Since the start of the year, feeder cattle prices have maintained a narrow range despite the recent volatility in the feeder cattle futures complex with the Feeder Cattle Index maintaining values in the mid- to upper- $ 270s. This market has been supported by a combination of tight domestic supplies and a slow ramp up of Mexican feeder border crossings. Additional support has been noted due to the recent break in corn futures. The Cattle Inventory report indicated that, on Jan. 1, there was a 114,000 head decline in feeder cattle and calves outside of feedyards compared to yearago levels. At the same time, there were 130,000 less cattle on feed. While a large portion of this can be attributed to the backlog of Mexican feeder imports, it also illustrates the overall decline in beef cows and calves.
As cattle continue to come off winter grazing, these tighter supplies will become more obvious. The same report indicated there were 35,000 fewer head grazing on small grain pastures in the three-state region to start the year compared to 2024. Though only a 2 % decline, this number does not show the full picture. Over the past few years, substantial irrigated wheat acres in the Red River area have been lost to corn and triticale production for silage to feed the growing number of dairies in Texas. On the dryland wheat front, dry conditions last fall led to delayed plantings and a later turnout with many calves not seeing wheat pastures until December. Smaller wheat production
required greater supplementation than usual while also resulting in many of these animals being pulled early, leaving a smaller supply in front of us. Expectations are for these animals to slowly trickle out across the next few months instead of seeing a large wheat pasture run.
A similar trend of lighter winter stocker grazing has been noted along the West Coast and Southwest as prolonged drought conditions in these regions have significantly reduced the available forage supply. However, grazing conditions in the Southeast have been mostly favorable this past winter, resulting in a more normal regional supply of feeders anticipated this spring. Overall, this record-small outside supply will continue to provide strength to feeder prices moving forward, with support near $ 270 and potential to reach $ 290 through the summer timeframe. This will continue to force cattle feeders to buy negative breakevens as they compete to fill pen space. Look for these tight supplies to lead to a smaller fed cattle inventory, particularly in the latter half of 2025.
Bottom Line: The ongoing constraints on Mexican feeder cattle imports have exacerbated an already tight domestic supply with a limited number of cattle available off winter wheat grazing. Look for feeder prices to be well supported in the $ 270 to $ 290 range for an eight-weight steer. www. NCBA. org NATIONAL CATTLEMEN 15