2022 has been a rough year for agriculture, including U.S. cattle producers. Randy Blach, CEO of CattleFax had this to say about the year.
Blach; “It’s been a tough year, but I would say, if we put it in perspective, it’s been a pretty tough stretch here over the last three or four years now. You think about August of 2019, we had the Tyson fire, and we created backups there in front-end supplies. And then, shortly after that, we got into the COVID situation, and we’ve had drought piled right on top of that through most of these, and the drought got wider-spread this year, so it’s been a difficult year. But I would say despite some of those headwinds, these markets have performed about as we expected and ended up averaging between 142 and 143 for fed cattle for the year. Feeder cattle and calf prices have responded as well.”
He says the price of feed is limiting opportunities for profit. “Grain and roughage prices have been the biggest shock to the system. We just aren’t generating much profitability out here for cow-calf producers. That’s been very, very difficult. And even though calf prices are $35-a-hundred higher than a year ago, there’s still not much money being made.”
He says the markets are rallying at the end of 2022 though. “We’re seeing a normal season rally. This is what we expect in years like this, with a high probability that we make our highest-highs of the year in November and December in what we call these non-expansion years. So, we typically take out the spring highs and make higher highs in the fall, and this year has been right on schedule.”
Cattle producers are very concerned about drought continuing through the winter months according to Blach.
“Well, it should be. We’re not going to get many cattle turned out it doesn’t look like, this fall, or the number of cattle in winter grazing programs is down significantly so far. You know the reality is even if we do, we got to remember that our feeder cattle and calf supply outside of feedlots is down 800,000 head. If we get rain, it’s gonna cost a pretty penny to buy those cattle and to be able to turn them out, so I think producers need to be aware of that. The market will respond very quickly when we have rain but keep in mind there’s 800,000 fewer of them to pick and choose from.”