After a few years of feeling like they were getting kicked while they were down, cattle producers are feeling a little more optimistic about 2023, as meteorologists and analysts alike are predicting a break in the drought.
Following a few back-to-back years of extreme drought, the United States Department of Agriculture (USDA) is recording 2022 as the lowest beef cattle inventory since 1962.
Tightened supplies have many asking the question: how long is it going to take for the herd to recover?
Lance Zimmerman, senior animal protein analyst for RaboResearch Food and Agribusiness, was at the Alberta Beef Industry Conference, at Banff, Alta., to give an update on the cattle markets and discuss the current state of the industry.
Zimmerman says when he reaches out to talk to cattle producers, beef processors, and consumers, he often talks about the cattle cycle, and the 10-year ebb and flow that happens in cattle supply.
“It takes a long time to transition from liquidation back into expansion,” he explains. “Even if we get wetter, cooler temperatures, a lot of it won’t have a major influence on this growing season, we’re probably looking into 2024. And that even said, before a cow/calf producer gets really excited about keeping back some heifers, or holding back a few more cows, they need not just pasture resources, but they need winter feed resources too. And obviously, both of those categories are awfully depleted coming out of last year.”
On a positive note, demand for protein has been strong — and Zimmerman predicts this will continue. (Story continues below video)
“Even with some of the headwinds that we faced towards the end of last year, and coming out of the holiday to start 2023, beef demand has been holding up exceptionally well,” he notes, explaining that it probably won’t be as good as that first year coming out of COVID-19 where there was lots of pent up demand from consumers. It still however could be a historically strong year for demand.
“All of those lockdowns — it taught a lot of consumers how to cook. As a result, they figured out ‘hey, we can actually make some pretty tasty beef dishes at home that we didn’t think were possible, except for a restaurant in the past.'”
All in all, Zimmerman is excited for 2023, citing a change in cattle on feed numbers, and more manageable numbers for the feed yards. It may not be as explosive as it was in the 2013-14 year, but as he explains, it could still be a very strong cash price environment.
“The reason I think it’ll still age back from that prior to that 10 year period of higher prices, is feed prices are probably still going to stay relatively high with excellent demand there. And again, relatively tighter supplies, not just in the U.S., but on a global basis, trying to get the right supplies to the right places.”