High market prices for cattle don’t always mean high profits

It’s true: Cattle market prices are at what some analysts have called “historic highs.” Unfortunately, profits are not.

For the entirety of 2023, slaughtered steer prices across all U.S. markets have remained above those of the previous year by 2030 cwt, ranging from $155 to $170, and practically soared above the 20172021 average by 40 cwt or more. According to recent data from the U.S. Department of Agriculture, fed steer prices reached above $175 cwt last week, topping the 2014-2015 record of about $172.

But of course, a dollar in 2023 is not what it was in 2014. According to the U.S. Bureau of Labor Statistics, inflation during those nine years has reduced the value of a dollar spent in the consumer price index by 28 cents.

James Mitchell, extension livestock economist for the University of Arkansas System Division of Agriculture, said inflation is just one reason to keep today’s market prices in perspective.

“I wouldn’t say we’re near ‘record territory,’” Mitchell said. “I’d say we have prices as high as we’ve seen in the last 10 years in nominal terms — which is still great. You have to be careful how you interpret that, however.”

Mitchell also emphasized that the cattle industry, as a whole, abides by a cyclical nature.

“We’ve had three, four consecutive years of liquidating cow herds, of tighter and tighter feeder cattle supplies, and that’s driven significantly higher,” he said.

But producers shouldn’t expect that upward trend to continue indefinitely.

For cattle producers in the U.S. Southeast and elsewhere, 2014-2015 was an unforgettable season, for reasons both good and bad. Prices spiked to record highs at the end of 2014, owing largely to market demand, at a time when feed, fuel and other input prices remained relatively low. When supply began catching up, however, market competition pulled the floor out from beneath those prices, leaving many producers with larger herds they had to either maintain or sell off at much-lower-than-anticipated prices.