Page 26 - MWC 3-30-2023s

The Midwest Cattleman · March 30, 2023 · P26
Very Strong First Quarter

By Stephen R. Koontz, Department of Agricultural and Resource Economics, Colorado State University
Cattle markets are ap- early. There may be more up this will persist with
proaching the end of the moves for the second quarter the slowing economy
first quarter of 2023 on a but that would likely require and the central bank’s
very strong note. Animal changes in the fundamentals aggressive moves to
prices across the board have not see now. Recent beef ex- control inflation. The
been very robust. Fed cat- port news has been disap- number of factors in
tle have traded above $165, pointing whereas pork and the for-and-against list
7-8 cwt feeder cattle have chicken exports have been regarding optimism in
traded above $190, and 5-6 strong. The relative protein cattle prices has more
cwt calves have traded just prices do much to explain on the against side.
short of $235/cwt. Live cat- this result. While retail mar- The one big change
tle futures approached with- gins have remained wide, possible in the for-cat- 17. Tighter supplies and
in $11/cwt of all-time high in contrast, packer mar- egory is the return to more thinner margins. Which will
prices established in Novem- gins narrowed considerably normal forage and feedgrain be made more pronounced
ber 2014. However, feeder through the fourth quarter prices. If that is the case, by any herd rebuilding. But
cattle are well below their of 2022. These margins are then feeder cattle and calves there appears to be little of
records due to the strength large compared to what is are rather under-valued. this in 2023 as beef cow liqui-
in the forage and feedgrain typically observed in the But that will take a retreat dation continues at a strong
markets. Cow-quality hay first quarter of the year. But from costs of gain that are pace. Again, there is more
is routinely above $200/Ton defining what is typical, or between $1.30 and $1.50 and more evidence of nor-
and corn has only recent- what is the new norm, is per pound. This is the major mal operations through the
ly shown enough weakness difficult given the events of change and current funda- supply chain. In particular,
to press below $6/Bu on the the past five years. What is mentals that would result in the volume of Saturday fed
board. Cash basis in the inarguable is the strength further strength in the calf cattle slaughter is off consid-
southern plains continues to of domestic demand. Con- market. erably compared to last year
hold at $1 over. sumers were willing to pay All in all, the first quar- whereas the Monday to Fri-
It is rather possible that very high retail prices for ter of 2023 looks to be more day slaughter has increased.
this strength is the usual large offerings of beef quan- of a return to market condi-
spring seasonal rally come tities. It seems unlikely that tions observed prior to 2016-

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