MARKET UPDATE

By Patrick Linnell CattleFax Analyst

The fourth quarter is almost always the largest of the year as spring calving operations wean calves and cull old and open cows . But the spike this fall has so far widely surpassed expectations , confirming that the cow-calf sector has not entered an expansion pace .

The industry entered 2023 with a little more than 28.9 million beef cows , 1.06 million fewer than the year prior after a record 13.4 % culling rate in 2022 . The aggressive slaughter pace continued into early 2023 with beef cow slaughter up from year-ago in January as dry conditions continued in many areas and capacity constraints in the fourth quarter pushed some cows into the new year .

The remainder of 2023 has seen beef cow slaughter below year-ago levels , but not down enough to signify stabilization of the cow herd . In fact , the week prior to Thanksgiving beef cow slaughter eclipsed year-ago levels once again .

In total , commercial beef cow slaughter is on a pace to be down around 460,000 head this year , an 11 % drop year-overyear . But at around 3.57 million head , this will still equate to a culling rate of 11.2 %. Historically , a culling rate of 9 % to 10 % is needed to see a stable cow herd , depending on the number of bred heifers coming into the year . Beef cow slaughter would need to be at least another 600,000 head lower to indicate stabilization . Consequently , the current trajectory of slaughter suggests the beef cow herd is likely to begin 2024 another 620,000 lower at 28.3 million .

The stubbornly higher beef cow slaughter is due to a multitude of factors . Lingering drought is the chief culprit but it ’ s not alone . Other culprits are higher interest rates and other costs ; hay supplies have been scarce and expensive in a few areas ; age of producers and simply the recent volatility and uncertainty ; and open rates have also been reportedly high this fall for some operations . To individual producers across the country , different combinations of these issues may or may not apply , but collectively it appears they have kept the industry out of expansion mode this fall .

Without hitting slaughter capacity limitations consistently like last fall , cow slaughter is likely to see a more typical seasonal decline into the first quarter of 2024 . More broadly , the expectation is beef cow slaughter will continue tighter into 2024 with again simply fewer numbers . But the pace will depend on producers ’ attitudes towards expansion and Mother Nature . Regardless of questions on demand , fewer beef cows and reduced slaughter numbers will keep cull cow prices historically firm and likely average higher yet in 2024 .

Bottom Line : Beef cow slaughter remains at an elevated pace , providing further evidence the industry is not broadly entering expansion this fall . To the contrary , the beef cow herd will show further contraction to begin 2024 .

25 NATIONAL CATTLEMEN www . NCBA . org