There has been, understandably, a drop in demand for beef the past few
months, backing up the supply chain. Cattle in the feedlots are being held
longer, so they are heavier when they go to market. These heavier cattle
are more apt to grade Choice, resulting in a near-zero Choice-Select
spread, and the trend in feeder steer and finished steer prices remains
I'm not hearing of herd reductions locally, and in the Northeast we may
remain relatively insulated until calves are sold this fall. As usual, I
expect we will have a reasonably strong market this spring for calves from
those who are doing a few in the backyard. I'm also not hearing of a drop
in demand for freezer beef, but I suspect there must be a softening of that
Meanwhile, the rumblings of cutting the dairy herd continue - this week's
Hoard's notes the "sense is that 300,000 cows need to be removed soon".
Whether through a federal program, through CWT, or through farm failures,
those cows will be coming into the beef market in the next year.
Is there a bright side? This winter was the quietest my phone has been with
respect to complaints about slaughterhouses - things didn't get better, but
at least they didn't get worse.
Also, those marketing local beef, who are often constrained by limited
supply, may be able to explore new markets in these times of lower demand
and higher supply of cattle.
For those of us with cattle, it always comes back to feed costs first, and
attention to the many other cumulative management decisions second. It is
nearly impossible to "manage" your way around $120 per ton hay when feeder
steers are under a $1.
Looking forward, at some point the cycle will change and those positioned
with replacements to sell will get some consolation. If you have cheap feed
and are an optimist, this may be the time to be building the herd.