Arkansas cattle prices surge as supply falls, demand holds steady
Jan. 27, 2023
By Ryan McGeeney
U of A System Division of Agriculture
Fast Facts:
- National cattle supply projected to be lowest since 2015
- Drought conditions in 2022 led to vast reductions in hay, forage production
(692 words)
FRIENDSHIP, Ark. — If you ask James Mitchell about the bright side of the 2022 drought,
he’ll tell you this: Better now than then.
“I’d much rather be having the conversation about current prices than about what they were one or two years ago,” Mitchell said on Jan. 23, addressing about two dozen attendees at the year’s first livestock and forage production meeting, held in Friendship, Arkansas.
Mitchell, extension livestock economist for the University of Arkansas System Division of Agriculture, said market prices for beef cattle are now significantly higher than they were in 2022 and earlier.
“Relative to the past couple of years, we’re starting off the year with much higher cattle prices in Arkansas,” Mitchell said. “For a 500-pound steer, we’re talking about prices that are $25 per hundredweight higher, compared to last year. That’s a significant increase, at least in Arkansas and the southeast. We’d probably have to go back to 2015 to find a similar scenario for Arkansas cattle prices.”
According to market data from the U.S. Department of Agriculture, Arkansas steers weighing 500-600 pounds have been fetching nearly $2/lb. in January.
The prices are a direct result of drought conditions that dominated agricultural production, from livestock to row crops, in much of the country last year. Most of the Mid-South saw significant reduction in hay production in 2022, according to USDA. Hay production in Arkansas, for example, fell 16 percent, to about 2.2 million tons. Texas suffered the most dramatic reduction, falling by 40 percent.
As hay and forage availability dwindled, many cattle producers in Arkansas and elsewhere cut deeply into their herds, slaughtering or selling off cattle they could no longer afford to feed.
“The overall forecast for the remainder of this year is that we’re going to see those
prices move higher, purely from a supply standpoint,” Mitchell said. “We just have
so many fewer animals than we did even a year ago. It’s really hard to overstate how
impactful the drought has been, in terms of the hard decisions that had to be made,
leading producers to sell large chunks of their operation because of lack of grass
and lack of hay.”
As recently as 2022, USDA’s National Agricultural Statistics Service ranked Arkansas
17th in the nation in cattle and calf inventory, with an estimated 1.7 million head, and
11th in the nation in beef cattle inventory, with an estimated 905,000 head. The agency’s
next biannual Cattle Inventory report in expected Jan. 31.
In July, NASS reported that the national beef cattle inventory had fallen by 2 percent. Mitchell said that he and other economists expect the Jan. 31 report to reflect a further decline of at least 4 percent.
So, while many producers in Arkansas and elsewhere may have less to bring to market, those that do have stock to sell will have the opportunity to cash in on higher earnings. However, Mitchell warns, those expectations hinge on the purchasing power of the American family.
“The single biggest thing I’m monitoring is what’s happening to the U.S. consumer,” Mitchell said. “The extent to which tight supplies lead to higher prices operates on the assumption that we’re not going to have any large erosion of consumer beef demand. You need to have both.”
Mitchell said that beef exports and trade could be a ‘wild card’ in 2023.
“Just from an economist’s perspective, even trying to figure out what’s going on in the U.S. economy can be quite challenging,” he said. “When you’re trying to do that for other countries, it can be a more daunting task. The United States isn’t the only country battling macroeconomic concerns.”
China, for example, is the world’s leading beef purchaser. The country’s decision in December to reverse its “zero COVID” policy led to mass infections across China, the market ramifications of which remain to be seen.
“The policies pursued by other countries can have important implications for the U.S. beef trade,” Mitchell said. “Forecasts from USDA call for lower beef exports in 2023. Those expectations mainly reflect lower expected production. You can’t export what you don’t have.”
To see a calendar of upcoming cattle and forage production meetings, visit https://bit.ly/AR-Forage-Livestock-Sked-23.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit www.uaex.uada.edu. Follow us on Twitter and Instagram at @AR_Extension. To learn more about Division of Agriculture research, visit the Arkansas Agricultural Experiment Station website: https://aaes.uada.edu/. Follow on Twitter at @ArkAgResearch. To learn more about the Division of Agriculture, visit https://uada.edu/. Follow us on Twitter at @AgInArk.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension and Research programs to all eligible persons without regard to race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.
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Media Contact:
Ryan McGeeney
rmcgeeney@uada.edu
@Ryan_McG44
501-671-2120