CattleFax CEO, Randy Blach, shared his predictions on future cattle markets during this year’s NCBA convention in New Orleans, Louisiana. While Blach’s forecast was primarily optimistic, he did offer a word of caution to attendees: “With these kinds of supply shocks that we are going to put into the market over the course of the next three to four years, we’re going to see unprecedented volatility.”
Since the last significant spike in the cattle market nearly a decade ago, the price spread has been relatively flat. However, some relief from drought conditions combined with a low cattle inventory will result in more money flowing across all sectors of the cattle industry, especially to cow-calf producers.
There is a 4 million headcount reduction expected in the cattle sector for 2025 and 2026, which Blach says is not only likely to make Saturday slaughters a relic of the past, but also squeeze some extra dollars out of processors and into the pockets of producers. He expects that the price average for a 550lb steer will increase by $29 per hundredweight (cwt), and the price for an $800lb steer to climb to an average range of $180-215/cwt, an almost $200 increase.
If prices are going up in favor of the producer, why the ominous undertones? Blach emphasizes that while the market is shifting in the producer’s favor, any moves it makes will be significant. He urged attendees to pay close attention over the next few years to take advantage of the opportunities this market will create and warned that producers are going to find it challenging to keep their operations full, as demand for cattle is expected to rise.
What does this “unprecedented volatility” mean for your operation?
Risk management tools such as Pasture, Rangeland, and Forage (PRF) insurance and Livestock Risk Protection (LRP) insurance, in particular, are going to be a great way to protect yourself from Blach’s foreseen volatility.
With LRP, you’ll be able to lock in on those higher prices when the market swings upwards, and be protected should it swing back down during your coverage period. PRF will help safeguard your profits when rainfall is low so that you can invest that money back into your ranch, and use the forecasted “bull market” to put yourself in a great position for the future.
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