Opinion: Why the cattle market is booming and where it can go from here

provided by Jennifer Davis

Jennifer Davis

The past several years have brought a surge of optimism to the cattle market, and perhaps nowhere is this more evident than in southwest Missouri.

As the first quarter of 2024 comes to an end, record prices for all classes of cattle are painting a vibrant picture for agribusinesses in our region. The latest projections from CattleFax, unveiled at the National Cattle Convention in late February, hint at a prolonged period of prosperity, potentially spanning the next few years.

What lies behind this unprecedented buoyancy in the cattle market and what implications does it hold for our local agribusiness community?

A primary driver of the soaring cattle prices is the persistent decline in cattle numbers, exacerbated by drought conditions gripping the Plains states. Southwest Missouri, though not immune to these climate challenges, has felt the impact of this trend. With half of all beef cows enduring dry weather or outright drought conditions, the ability of many producers to engage in expansionary endeavors has been severely curtailed. The January U.S. Department of Agriculture cattle inventory report underscores this reality, revealing a 2% decrease in total cattle numbers compared with the previous year.

Yet, amidst these challenges, lies an opportunity for those willing to seize it. As Randy Blach, CEO of CattleFax, aptly notes, the pinnacle of cattle prices in this cycle might not arrive until 2026. This prediction serves as a clarion call for local agribusinesses, urging them to capitalize on the current market fervor. However, the window of opportunity is not indefinite, as it takes more than two years to cultivate a replacement heifer and reap the full benefits of these bullish market conditions.

Demand dynamics also play a pivotal role in propelling cattle prices to new, unprecedented heights. Despite the premium prices, consumer appetite for beef remains robust. The allure of beef, coupled with its versatile culinary applications, continues to resonate with consumers, translating into sustained demand. Still, a note of caution rings within the industry, as alternative meats like pork and poultry offer lower retail prices, potentially enticing consumers away from beef in the future.

For local producers contemplating herd expansion, the time is ripe to act. The current landscape presents a favorable moment to bolster cow herds with bred heifers fetching competitive prices. Mike Murphy, CattleFax chief operating officer, underscores the long-term value proposition, emphasizing that the upfront investment in bred heifers can yield substantial returns over their productive lifetimes.

As the cattle market scales new heights, southwest Missouri cattle operations stand at the precipice of unparalleled opportunity. The merging of supply constraints, resilient demand and prudent investment outlooks paints a promising picture for stakeholders across the value chain. However, amidst the optimism, caution remains vital. Producers must navigate the market dynamics judiciously, leveraging the current momentum to fortify their operations against future uncertainties.

The cattle market’s current buoyancy represents more than just fleeting optimism – it embodies the resilience and resourcefulness of our local agribusiness community. By harnessing the prevailing market winds and embracing strategic foresight, local farmers can chart a course toward sustained prosperity, ensuring a vibrant and resilient future for our region’s agricultural landscape.

Jennifer Davis is a loan officer and agricultural lender for OMB Bank in Ash Grove. She can be reached at j.davis@oldmobank.com.