Several years of drought in many parts of the country have spurred contraction in the U.S. beef cattle herd, and it will continue to get tighter, an agricultural economist said, adding that prices will continue to increase.

With the drought now easing, cattle producers are in a much better spot going into 2024, said Brett Wilder, an agricultural economist with the University of Idaho.

Cattle supplies are tight, and that translates into higher prices, he said. The price for steer calves is forecast upward of $300 to $320 a hundredweight in 2024, eclipsing even the record-high average calf price of about $250 cwt. in 2014 and 2015.

It’ll be a really good opportunity for Idaho producers to sell calves next fall, he said during the University of Idaho Ag Outlook Seminar.

Lofty prices

At a price of $320 cwt., a 550-pound steer calf would bring $1,760. Because the bred cow price is generally 1-1/2 times the steer calf price, a bred cow would sell for $2,640, he said.

“We’re in full swing for contraction. Beef females are worth more than they ever have been,” he said.

And calf and female prices are not done going higher, he said.

The price for 700-800-pound feeder steers is forecast to top $275 cwt. over the next two years, and the price of fed steers is forecast above $200 cwt.

“Margins are working in producers’ favor,” he said.

Fed cattle slaughter capacity is supportive of those prices, he said.

“Leverage in the beef packing industry is shifting back to producers,” he said.

Profitable returns

While the cattle on feed inventory is bearish, steer slaughter is slightly less week to week, he said.

“We are going to have a situation where it’s good to be a cow-calf producer and feeder. If you own beef cows, you’re going to see some good times,” he said.

Average cow-calf returns in 2023 are $244 per cow. They’re expected to be $504 in 2024 and $690 in 2025.

Annual average feeding returns in 2023 are $279 a head, he said.

“It’s been a great year to be in the feeder industry, the cow-calf industry,” he said.

Demand tested

“Cattlemen are very, very well positioned for a couple of years,” he said.

That is if demand stays strong and the geopolitical environment remains flat. The trick is going to be having enough supply in processing plants, he said.

Beef in cold storage is way below trend, he said. Inflation is coming down but it’s still not negative. Fresh beef is going to be $8 a pound in the grocery store while tight supplies exist, and that’s tough on demand, he said.

The short supply also means there’ll be fewer beef exports and more imports. Annual exports of 4.5 billion pounds will probably drop to between 3 billion and 4 billion pounds, he said.

Dairy opportunity