Live Cattle Prices Explained
Live cattle prices sharply increase by 3.75% as the market experiences small cattle inventories due to herd liquidation in 2023. As a result, experts predicted that these prices will likely last throughout this year because of continued beef production reductions.
Why are live cattle prices fluctuating?
Live cattle prices mainly depend on the supply and demand in the market. However, some inherent factors cause its market value to increase and decrease.
1. Feed Prices
Corn and soybean are the primary feeds of cows. Thus, they also hold its market price. An increase or decrease in these feeds’ prices will highly influence their value in the market.
2. Weather Conditions
Spring and summer are the breeding and grazing seasons for cows. However, hurricanes and typhoons don’t pay attention to any calendar.
For instance, in the U.S., peak hurricanes usually occur from summer to autumn which greatly impacts farmers and herders. Additionally, India suffers from extreme weather temperatures which lessen its grass-feeding grounds and impact the quality of its meat production.
Overall, this can cause production disruption, low supply, and increased market price for live cattle.
3. Processing Capacity
Processing plants don’t always function at their peak as they require labor and maintenance.
This means that if processing plants have a limited capacity to process slaughtered cattle, this will cause a low beef supply in the market which will eventually lead to higher demand and live cattle value fluctuation.
4. Alternative Products
One good alternative to livestock is poultry. If consumers see a continuous beef price hike in the market, they will resort to choosing poultry products as a cheaper option. Thus, this shift will likely hold livestock prices depending on some circumstances.
Which variables impact the price of live cattle?
- Feed Prices
- Weather Conditions
- Processing Capacity
- Consumer Demand
- Trade Policies
- Technological Advancements
Where does live cattle come from?
Cattle are descendants of aurochs. Aurochs are large wild animals originally from India and China. The earliest cattle domestication recorded was in the Middle East around 8,000 to 10,000 years ago.
Additionally, natural migration, human transportation, and trade made the spread of cattle around Europe, Africa, and Asia.
For example, the Italian explorer Christopher Colombus brought cattle offspring from Asia to the West in 1493 and this culminated in cattle herding and expansion around the West.
There are two main types of live cattle auctions:
Regular weekly sales: Generally, these auctions are held on a regular schedule, typically once a week. They are open to all types of cattle, including feeder cattle, beef cattle, and dairy cattle.
Special sales: These auctions happen on an irregular basis. It typically focuses on a specific type of cattle such as feeder cattle, beef cattle, or dairy cattle. Additionally, special sales are held for specific breeds such as Angus or Hereford cattle.
Within these two main types of auctions, there are a number of different subtypes. These include:
1. Feeder cattle sales: This focuses on the sale of cattle that are not yet ready to be slaughtered. They are typically sold to ranchers or feedlots where they will be raised until they reach slaughter weight.
2. Beef cattle sales: This targets the sale of cattle that are slaughter-ready. The selling happens in the slaughterhouses where they will be processed into beef products.
3. Dairy cattle sales: Dairy cattle sales are about selling cows and heifers. Dairy farmers are the top buyers of these herds as they are used to produce milk and cheese.
4. Replacement cattle sales: Replacement cattle sales focus on the sale of cattle which is used to replace existing cattle in a herd. These include breeding heifers, breeding bulls, or replacement steers.
5. Purebred cattle sales: Breeders are the top customers in this area as they buy purebred cattle to produce offspring with desirable traits.
Overall, cattle herding become easy nowadays due to modern technology and crossbreeding. Today, the majority of our favorite steak menu comes from the United States, Brazil, China, and India.
What is the future price of live cattle?
Live cattle are characteristically raised and sold throughout the year. However, certain times of the year prove their high supply, demand, and price.
In the U.S., its breeding, production, meat supply, and demand are high in summer due to its grilling season and outdoor activities.
Popular breeds in the U.S. are Angus, Hereford, Simmental, Limousin, and Brahman. In India, its trading and meat supply are at their peak in November due to favorable weather and cultural traditions.
However, the weakening supply due to expensive production costs and low incentives from the government further restrict its production. For instance, U.S. beef exports began cooling in 2022.
Furthermore, Argentina announced an extended export ban on roughly 23% to 25% of the country’s total beef production due to the country’s soaring domestic beef prices. Experts projected that the extension will last throughout 2024.
Thus, this limitation will further squeeze the global meat supply.
Overall, though there is constant cattle production in the market, its price still relies heavily on demand and supply, and by 2030 the global demand for meat including beef will increase to 0.3%. By then, the projected price for live cattle is $198 per pound.