profitability in 2023 with potential drought relief for the West

The CattleFax Outlook Seminar, held at the 2023 Cattle Industry Convention and NCBA Trade Show in New Orleans, shared expert market and weather analysis.

Prices and profitability will again favor cattle producers in 2023. The cattle industry is entering 2023 with the smallest cattle supply since 2015 as drought caused the industry to dig deeper into the supply of feeder cattle and calves. While the exact path to drought relief is unknown, improvements are also expected to translate to moderating feed costs, especially in the second half of 2023. Combined with increased cattle prices, cattle producers, especially the cow-calf operator, will continue to see an improvement in margins for the next several years, according to CattleFax.

Meteorologist Matt Makens said the latest forecast for La Niña has only a 14 percent probability of existence this spring and down further by the summer, which means a pattern change comes our way this year. A neutral phase will take control of the pattern as La Niña weakens and may last several months before giving El Niño a chance to grow this summer and into the fall.

Makens said putting this latest La Niña episode in the review mirror suggests improving drought conditions, more favorable growing seasons and healthier soils.

“I’m not trying to imply that doing away with La Niña fixes everything. An El Niño can cause drought across the northern states. There is no win-win for everyone in any weather pattern,” Makens added. “But moisture conditions should improve for the West in the second half of this year.”

Kevin Good, vice president of industry relations and analysis at CattleFax, reported that U.S. beef cow cattle inventories have already fallen 1.5 million head from cycle highs. The 2023 beef cow herd is expected to be down about another million head to nearly 29.2 million.

“Drought affected nearly half of the beef cow herd over the last year, exacerbating the liquidation in 2022. Drought improvement and higher cattle prices should drastically slow beef cow culling through 2023,” Good said.

Feeder cattle and calf supplies outside of feedyards will be 400,000 to 450,000 head smaller than 2022 at 25.1 million. After being full for most of the past three years, cattle on feed inventories are expected to begin 2023 at 300,000 to 400,000 head below last year, at 14.3 million head, and remain smaller. Commercial fed slaughter in 2023 is forecast to decline by 750,000 to 800,000 to 25.6 million head.

“With drought forced placement and culling, beef production was record large in 2022 at 28.3 billion pounds. Expect production to drop over the next several years – declining 4 percent to 5 percent in 2023 to 27 billion pounds,” Good said. “The decline in production in 2023 will lead to a 2.2-pound decline in net beef supply to 57 pounds per person.”

Good forecast the average 2023 fed steer price at $158/cwt., up $13/cwt. from 2022, with a range of $150 to $172/cwt. throughout the year. All cattle classes are expected to trade higher, and prices are expected to continue to trend upward. The 800-lb. steer price is expected to average $195/cwt. with a range of $175 to $215/cwt., and the 550-lb. steer price is expected to average $225/cwt., with a range of $200 to $245/cwt. Finally, Good forecast utility cows at an average of $100/cwt. with a range of $75 to $115/cwt., and bred cows at an average of $2,100/ cwt. with a range of $1,900 to $2,300 for load lots of quality, running-age cows.

When looking at domestic beef demand, the U.S. economy will be a driving factor going in 2023. CattleFax said inflation, rising interest rates and general economic uncertainty will continue to impact consumer purchasing decisions as many look to limit spending. Inflation reached a 40-year high in 2022, triggering the U.S. Federal Reserve to raise interest rates seven times last year with intentions for further rate increases until inflation falls. Through the Federal Reserve hopes to accomplish a “soft landing” and avoid recession, the U.S. economy is expected to slow in 2023 with most economists calling for a mild recession in the second half of the year.

Good noted that though beef demand has softened, it remains historically strong, and consumers have shown willingness to continue to buy beef in a new and higher range. He expects the 2023 USDA All-Fresh Retail Beef prices to average $7.35/pound, up 4 cents from 2022.

He also said wholesale demand will appear to be softer, as prices will not go up at the same rate of inflation despite tighter supplies. The cutout value should move higher to average $270/cwt. for 2023.

Global protein demand has continued to rise around the world and tighter global protein supplies should broadly support prices in 2023. After more than 20% of growth across the last two years, U.S. beef exports are expected to moderate, declining 3 percent in 2023 to 3.5 billion pounds.

Japan and South Korea remain the top U.S. beef export destinations with stable exports in 2022. Meanwhile, Chinese demand has continued to grow with tonnage up 20 percent last year, likely with continued room to grow.

Mike Murphy, CattleFax vice president of research and risk management services, said The Dec. 1, 2022 natinoal on-farm hay stock were down 9 percent from a year-ago at 71.9 million tons with hay prices averaging $216/ton in 2022.

“Last year was the smallest U.S. hay production year since 1959,” Murphy said. “Hay prices will likely continue to be high in the first part of 2023, but we expect weather patterns to improve pasture conditions as early as this spring which should help stabilize and soften hay prices throughout 2023.”

CattleFax said corn stocks-to-use are just under 9 percent and will continue to support the market above $6/bu., and provide resistance near $7.50/bu. into the summer with a yearly average price of $6.50/bu. expected.

Blach concluded the session with an overall positive outlook, expecting improvements in the weather pattern and a tighter supply to distribute more money though all sectors of the cattle industry.

Visalia Livestock Market Annual Bred Cow & Pair Sale

1,000 HEAD OF FANCY REPLACEMENT FEMALES SELL SAT., APRIL 22

Lunch 12 p.m. • Sale 12:30 p.m. in Visalia, CA // Watch & Bid Online: DVAuction.com or LMAAuctions.com

Check Out These Early Featured Consignments & Visit Us Online for More

200 FALL-CALVING, FIRST-CALF, COMING 3-YEAR-OLDS

150 Fancy Angus/Angus-cross & 50 Fancy Red Angus/ Red Angus-cross first-calvers, calving at 32-monthsold sell. They are ultrasound confirmed to calve between Sept. 10th and Oct. 15th. They sell bred to 100% top-end, very balanced Ludvigson Stock Farms & Iron Lorenzen Cattle low-birth Red Angus bulls.

All have complete DNA information through Zoetis INHERIT Select® fertility testing for commercial females. Hand-selected from the top-end of 700 replacements, they originated from reputation ranches.

They are foothill & anaplas vaccinated & on complete yearly vaccination & mineral programs. They have been running in the Sierra Mountain Foothills for 2 seasons.

120 FALL-CALVING FANCY, ANGUS SECOND-CALVERS

This fancy set of Angus second-calvers, originating from the GI Ranch, Paulina, OR, sell bred to high quality Angus bulls are due to start calving Sept. 1st. They are foothill & anaplas vaccinated and on a complete yearly vaccination program.

200 FANCY, YOUNG ANGUS & RED ANGUS FALL-CALVERS

These 2nd and 3rd Calf, Fall-Calving Cows all originated from 4 large Montana and Wyoming ranches. They are foothill vaccinated and on a yearly vaccination program. Bred to high-end Angus & Red Angus bulls, they will be ultrasound confirmed to calve between Sept. 10th and Oct. 30th.

40 ANGUS, SECOND-CALVERS DUE IN JUNE AND JULY

Top-end females originating from 2 Montana ranches sell!

80 ANGUS-CROSS, SECOND-CALF, FALL-CALVING COWS

Originating from 2 California ranches, these females were born & raised in tough foothill & anaplas country. They sell due to calve Sept. 1st to high-end Angus bulls.

CONSIGNMENT INFORMATION:

RANDY BAXLEY, 559-906-9760 www.VisaliaLivestock.com

SALE EVERY WEDNESDAY

733 N. Ben Maddox Way, Visalia, CA

On Monday, January 23, James Albert Sloan, age 97, passed away at his home in the Lompoc valley with his family at his side.

James, a third-generation resident of Lompoc, was born in Santa Barbara on Feb, 22, 1925 to Harry and Clara (Turner) Sloan. He graduated from Lompoc High School in 1943, where he held a track and field record in the pole vault for almost 20 years. He was later inducted into the Lompoc High School Alumni Association Sports and Achievements Hall of Fame. With a love of flying and after spending many days of his youth building gas-powered model planes, he tried to enlist in the Army Air Corps at age 17.

His plans changed when, during the eye exam portion of the physical, the doctor said, Buddy, you’re as color blind as they come. Following high school, he served with the U.S. Army’s 528th Antiaircraft Artillery Gun Battalion during World War II in Morotai, the Philippines and South Pacific.

In 1946, after being discharged from the Army, James attended the University of California, Davis, agricultural program near Sacramento, then returned to Lompoc to work with his father, Harry, on the family cattle ranch.

In 1948, he met his future wife, Esther. They married in 1949, and spent the next 50 years raising cattle and farming in the Lompoc valley. Although a farmer by occupation, his interests went well beyond the profession he cared for. He loved woodworking, leather braiding, and particularly listening to and playing music. He served on the board of the California Cattlemen’s Association, and the Lompoc Evergreen Cemetery Board.

James, a loving husband, father and grandfather created lasting memories for his family, and his humbleness, kindness and gentle spirit will be greatly missed. He is survived by his wife of 73 years, Esther, sons Thomas (Cindy) Sloan and Michael (Karen) Sloan, daughter, Susan (Darryl) Dalcerri, five grandchildren- Jeremy (Suzanne) Dalcerri, Jason (Brittany) Dalcerri, Jamie Sloan, Sandra (Roger) Baril, and Madalyn (Zack) Mays, and eleven great-grandchildren. A private graveside service for the family will be held at the Lompoc Evergreen Cemetery. Contributions may be made in his honor to the Lompoc Valley Historical Society.

Mary Niesen

Mary Victoria Niesen, daughter of Justin and Alicia Niesen arrived January 23, weighing 8 pounds, 1 ounce. She joins big brother Jim. Grandparents are Jeff and Sheila Bowen, Glennville and Lori Niesen, Williams and Walt Niesen, Willits.

Lenni Parker

Lenni Elma Parker made her entrance into the world on Feb. 9, 2023 weighing 7 pounds, 1 ounce and arriving just in time to be the perfect valentine for her parents, Gaby Bertagnolli and Cody Parker. Lenni’s grandparents are Lenny and Kathi Bertagnolli, Sierraville and Doug and Judy Parker, Williams.