Heavy Cattle Weights Mostly Offset Tight Cattle Supplies
The relatively slow pace of slaughter in the first 4 months of 2024 contributed to the number of cattle on feed longer than150 days on May 1st being the highest since May 2012. According to industry participants, some packers are foregoing typical discounts on cattle above certain weights, further incentivizing feedlots to keep cattle on feed longer, especially as they maintain feedlot capacity utilization in the face of slowing placements.
As a result, weekly steer and heifer carcass weights remain at record highs for this time of year. For the week ending May 25, 2024, steer and heifer carcass weights were 37 and 29 pounds, respectively, above the same week a year ago. This additional weight is enabling packers to partially offset the impact of having fewer cattle to process than a year ago, as carcasses are yielding about 4 percent more product year over year.
Cattle Prices Steady With Heavier Cattle Weights
Demand for feeder cattle remains steady, supported in part by improved forage and pasture conditions from a year ago across most of the country. This has enabled cattle to go on grass rather than into feedlots, particularly as feedlots are limiting placements in response to high feeder prices. In May, the weighted-average price for feeder steers weighing 750–800 pounds at the Oklahoma City National Stockyards was $253.90 per hundredweight (cwt). This was a decline of $0.25 from April but more than $48 higher than May 2023. In the first 2 weeks of June, the weighted average price was $253.25 per cwt, a slight decline from the May average. Accounting for recent price data in June, the price forecast for the second quarter is lowered $1. The fourth- quarter forecast is also lowered $1, resulting in a decrease to the 2024 forecast to $254.96 per cwt. The outlook for 2025 feeder steer prices is unchanged from last month at $258.50 per cwt.
As noted, the heavier cattle weights are partially offsetting the tight cattle supplies. Fed steer prices have gained in recent weeks thanks to wholesale prices moving counter-seasonally, which has improved packers’ margins, likely making them more willing to pay higher prices for these heavy cattle. In fact, the weekly weighted-average fed steer prices in the 5-area marketing region 2 hit a new record for the week ending May 26 of $190.09 per cwt.
The average price for May was $187.88 per cwt, $0.33 above the record set in March 2024 and $12 higher than last year. Based on recent data in early June, the second-quarter 2024 fed steer price forecast is raised $2 to $186 per cwt. The third quarter is raised $1 to $183, and the fourth quarter is lowered $1 to $186 per cwt on the slower-than-previously-expected pace of marketings in the fourth quarter. As a result, the forecast for 2024 is raised $0.50 to $184.01 per cwt. The outlook for 2025 fed steer prices is raised $0.25 from last month at $188.50 per cwt, based on a faster-than previously expected pace of slaughter in the first quarter.
