Unwinding cattle futures prices and bearish sentiment weighed on cash prices until a mid-September bounce that offered a glimpse of underlying fundamental strength and higher prices on the horizon.

Glynn Tonsor, agricultural economist at Kansas State University (K-State) provided perspective at the recent K-State Beef Stocker Field Day. He believes expanded cattle numbers are still at least two years down the road. While cattle prices have been record-high and near-record high this year, he explained average returns per cow still lag the last historic price run, due in part to higher inflation and higher interest rates.

Tonsor shared the latest price projections from the Livestock Marketing Information Center (LMIC). Analysts there forecast next year’s Southern Plains price for 500-600 lb. steers at $310-$320/cwt., compared to this year’s projected annual price of $308-$313. The projected 2026 price is $313-$328.

LMIC estimates the annual Southern Plains 700-800 lb. feeder steer price at $255-$260 this year, at $265-$275 next year and at $268-$283 in 2026.

Finally, LMIC forecasts the five-area direct fed steer price at $186-$191 this year, at $191-$201 next year and at $196-$212 in 2026.

In the meantime, seasonal pressure is likely, though perhaps muted.

“There are a few factors working against calf prices at the moment,” Andrew P. Griffith, agricultural economist at the University of Tennessee, explained in his early-October market comments. “The first of those is clearly the seasonal trend associated with a large number of calves being weaned and marketed during the fall months. The second is the increased incidence of morbidity and mortality associated with the drastic temperature swings that will soon come into play. Third is the widespread drought conditions in many parts of the country.”

Approximately 70% of the continental United States was experiencing abnormally dry or drought conditions the first week of October, according to the U.S. Drought Monitor. That was 12% more than a year earlier.

Based on late-summer price weakness, USDA’s Economic Research Service (ERS) slashed expected average feeder steer prices for the remainder of this year in the September Livestock, Dairy and Poultry Outlook. Compared to the previous month’s projections, ERS reduced the forecast third-quarter price by $9 to $252/cwt. and the fourth-quarter price by $13 to $255 for an annual average price of $251, which was $5.50 lower. The prices are basis Medium and Large #1 steers weighing 750-800 lbs., selling at Oklahoma City.

For next year, ERS reduced the forecast first-quarter price by $3 to $248 and the second-quarter price by $5 to $254 for an annual average price of $254, which was $5 less than the previous month’s projection.

Likewise, ERS lowered expected five-area direct fed steer prices for the remainder of this year and the first half of 2025, in the September World Agricultural Supply and Demand Estimates.

Forecast prices were lowered by $3 in the third quarter to $188/cwt. and by $7 in the fourth quarter to $183 for an annual average of $185.11, which was $3 lower than the previous month’s estimate. Projected prices were lowered in the first quarter next year by $3 to $186 and by $4 in the fourth quarter to $186 for an annual average price of $186, which was $5 lower.

Conversely, Griffith notes competition for declining calf supplies will add price support this fall.

“It will not just be stocker producers and backgrounding operations competing for these animals. There will be feedlots looking to place calves on feed at lighter weights as they look to fill pens,” Griffith explains. “With the decline in feed prices and reduced availability of yearling cattle, feedlot managers will be looking for a way to fill the pens and keep them filled for a longer period of time.”

Carcass weights remain elevated

Longer feeding periods and heavier year-over year carcass weights continue adding some of the current price pressure.

Estimated total cattle slaughter the first week of October of 611,000 head was 1,000 head fewer than the previous week and 16,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 23.9 million head was 950,000 head fewer (-3.8%) than the same period a year earlier. Estimated year-to-date beef production of 20.2 billion pounds was 150.1 million pounds less (-0.7%).

Cattle on feed Sept. 1 of 11.2 million head were 71,000 head more (+0.6%) year over year.

Feed grain prices remain 18-24% lower than last year, allowing feedlots to continue holding cattle longer to increase fed weights, according to Hannah Baker, Extension beef cattle and forage economist at the University of Florida. 

“Average steer dressed weights reached 925 pounds as of September 1, almost 3% heavier than year-ago levels and 4% higher than the historical average,” Baker explains in the late-September issue of In the Cattle Markets. “The percentage of cattle grading Choice has also increased by 3.5% since last year and by 2% compared to the 2018-2022 average.”

Further, Baker notes that while current price trends are similar to those in 2015 during the same period, herd expansion had already begun.

“There was no incentive for prices to climb back up after the typical dip in the fall,” Baker explains. “In the current market, we have not seen signs of stabilization, much less expansion, and have already hit record prices that we saw back in 2015. This indicates that while we are experiencing some seasonality this year, it is not expected that we are headed for a continuous low level of cattle prices.”

Beef cow numbers will likely be less year over year at the beginning of 2025 with limited potential to expand until the following year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

Although year-to-date beef cow slaughter is 16.3% less so far this year, Peel explains in his weekly market comments, “The rate of beef cow slaughter in 2024, although sharply lower year over year, is not down enough to offset the small bred beef heifer inventory at the beginning of the year. The beef cow herd is likely down year over year in 2024.” He adds the 12-month moving average of the heifer slaughter percentage of total cattle slaughter has yet to decrease.