The 2024 calf crop was only marginally lower than the 2023 output. This was largely due to the decline in the beef cow slaughter. Beef cows that had calved as of Jan. 1, 2025, were only down 149,500 head from 12 months earlier.

U.S. dairy cows calved as of Jan. 1 were up 2,500 head from year-ago levels. It’s important to note many Holstein-Angus cross calves qualify as Certified Angus Beef in the U.S. market.

Feeder cattle prices, meanwhile, reached historical highs in January 2025. I’ve received many calls from cow-calf producers asking about the price forecast for the fall. I wouldn’t be surprised if calf prices topped out in the fall of 2025, then started to trend lower in 2026. It’s that time of year when we discuss total inventory numbers and projections for 2025 and 2026.

First, the U.S. beef cow slaughter for 2024 finished at 2.907 million head, down from 675,000 head from the 2023 processed number. The dairy cow slaughter for 2024 was 2.775 million head, down 358,900 head from the 2023 processed number.

Looking forward, we expect to see a similar year-over-year decline in the beef and dairy cow slaughter for 2025. The lower beef and dairy cow slaughter is sufficient to maintain the calf crop at current levels. This is the first sign of herd expansion activity because it’s the easiest and lowest-cost behaviour for the cow-calf producer.

The total calf crop for 2024 came in at 33.529 million head, down only 33,500 head from the 2023 output of 33,563 head. We basically say that the 2024 calf crop was the same as in 2023.

Heifers for beef cow replacement as of Jan. 1, 2025 were down about 46,000 head and milk replacement heifers were down around 57,000 head. This trend is expected to reverse in 2025. During the summer and fall of 2025, we expect U.S. cow-calf producers to hold back about 400,000 to 500,000 head of heifers for herd expansion. We’re expecting about 100,000 head of dairy heifers to be retained.

The calf crop for 2025 is expected to be similar to 2024 in the range of 33.6-33.8 million head, slightly higher than the 2024 output. The calf market will likely peak during the first round of heifer retention.

Feedlot operators have experienced a profitable round of feeding this winter. When a finishing operator is purchasing replacements, they will often bid up the price of feeder cattle so margins cover the cost of feed and interest only.

They need about six to eight months of negative margins before there is a serious adjustment in the feeder cattle price. We don’t believe prices are going back to values from three or four years ago; however, a 500-lb. steer trading in the range of $460-$480 is more reasonable, long-term, instead of the current value of around $550.

Given our projection, feeder cattle prices will likely hold value through the fall and early winter of 2025-26, then start to decrease next spring. There is potential for a serious downward adjustment in the feeder market in the summer and fall of 2026. We expect prices for bred cows and bred heifers to peak this fall, then soften. When owning cows, you have to look at a 10-year time frame and believe they are priced at fair value over the long run.

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In central Alberta, larger frame Simmental cross steers carrying lighter butter on light grain and silage diet with full processing data averaging 900 pounds traded for $375. In the same region, medium to larger frame, black mixed heifers weighing 865 pounds with some fleshier types included, supposedly traded for $340.

North of Saskatoon, mixed steers carrying medium flesh levels weighing 875 pounds coming off backgrounding grain diet with full processing records supposedly traded for $377 fob farm. At the St Rose Auction in Manitoba, the market report had Charolais steers weighing 846 pounds selling for $385.

East of Edmonton, a small package of Angus blended heifers carrying medium flesh averaging 800 pounds sold for $355. South of Edmonton, black, wide frame Limousin based heifers evaluated at 800 pounds with lower flesh levels were last bid at $367.

Southeast of Calgary, Charolais cross steers weighing 680 pounds apparently traded for $455. At the Ponoka sale on March 12, red mixed steers with a mean weight just under 600 pounds notched the board at $506. North of Calgary, red mixed heifers averaging 630 pounds supposedly settled at $431.

At the Lloydminster sale, a smaller package of black steers weighing 516 pounds silenced the crowd at $571. In southern Manitoba, a smaller package of black mixed steers weighing 507 pounds reportedly moved through the ring at $505. Northwest of Winnipeg, red mixed steers weighing 460 pounds apparently dropped the gavel at $582.

Alberta packers were buying fed cattle on a dressed basis in the range of $450-$455/cwt delivered, up $5-$20/cwt from the week ending March 8. Feeding margins continue to hover in positive territory which is supportive for the feeder complex. In the short-term, feedlot operators have a bullish outlook for fed cattle. This is barring no U.S. tariffs of course.

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While analysts try to simplify terms and economic theory for the average reader, many subscribers call and ask questions proving that I’m not communicating effectively.

When fundamental analysis fails, a picture can be worth 1,000 words. Technical analysis is very useful for the cattle producer when marketing finished and feeder cattle.

Many finishing feedlot operators realize that when they purchase replacement cattle, the margins don’t pencil out. As Wayne Gretzky stated, “Skate where the puck is going, not where it has been.” As one finished operator stated, “I buy feeder cattle based on where I believe the market will be in the future, not where it has been.” The cow-calf producer needs to also plan marketing on expectations of where the market will be in the future, not where it is today.

Technical analysis is a skill, just like fundamental analysis. It takes years of experience to recognize market behaviour. When you’re married for a long period of time, you become familiar with your spouse’s behaviour and daily patterns.

When you trade a market for an extensive period of time, you become “one” with the market. Each commodity market has its own personality. Just like any business, 20 per cent of the traders conduct 80 per cent of the volume. The combined personality of all these traders is the personality of that specific market. The 20 per cent of the traders have been around a very long time and are also considered the “smart money.”

In this article, I’m going to provide technical analysis for the April 2025 live cattle futures. During the winter, this is the most heavily traded contract and is considered the leader. Finishing operators will base their purchasing decisions on the April contract for 800-plus-lb. feeders. April live cattle had resistance at or around $192.50, which I’ve drawn on the chart with a thicker red line (all figures US$ except where otherwise noted). The April contract experienced a dip during August and September before trading back up to the resistance level.

During October, November and December, the market struggled to break above this resistance. This pattern is called a “teacup formation” because it looks like a teacup. Technicians measure from the inside of the “teacup” to the resistance level. This distance from the inside of the teacup is used to project the upside potential.

We measure from the inside low, which is $180, to the resistance, at $192.50, which equals $12.50. We add the $12.50 to the $192.50 to project an upside target of $205. At the time of writing this article, the market had accomplished this objective.

This is very useful for the cow-calf producer deciding when to market their calves. I received many calls throughout the fall from cow-calf operators asking if they should market their calves in the fall or wait until January. I mentioned to these callers that there was a high probability for a rally in the live cattle market during the winter based on this technical formation.

There is one other common way to analyze this chart. The market traded in a range during October, November and December. When a market trades in a range for a long period of time and then breaks out of the longer-term range, there is usually a significant move in the direction of the breakout. During this rangebound trade the lows on each dip were considered higher lows. I’ve drawn this with the black line, which has an upward slope. This tells us that sellers are backing away on each dip. Markets go up because of the lack of selling. Markets go down due to the lack of buying. In this case, producers anticipate a breakout to the upside.

There is an old trading principle which says when a market moves above a key psychological level for the first time in history, such as $200, the market usually has enough momentum to eventually trade eight to 10 per cent above this key level. Time will tell, but this market still has upside potential longer-term. Technical analysis can be a useful tool when planning your strategy for marketing feeder cattle. You don’t need complicated formulas. Experienced technicians can recognize patterns or behaviour of the markets that have a high probability of reoccurring or developing. Cow-calf producers can use this information to plan their marketing strategies. Finishing operators often buy feeder cattle based on where they expect the fed market to be in the future.

Cow-calf producers need to have the same mindset for their marketing. In our example, a $12 move in the live cattle futures would result in an additional Cdn$15 to the western Canadian feeder market, which is exactly what happened in January.

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Feeder cattle markets have been trading at record highs, which may have contributed to the feeder cattle liquidation; however, most cattle producers were selling in anticipation of U.S. tariffs on cattle and beef.

Since President Trump won the U.S. election, I’ve been overwhelmed with calls from cattle producers asking how tariffs will influence the price of cattle in Western Canada. In this issue, I’ll discuss the expected implications on the cattle and beef markets. Cattle and beef are unique commodities compared to wheat or even steel. This is because the demand curve is rather steep. The influence of a tariff on beef or cattle is totally different than a tariff on other commodities. I’ll specifically discuss the fed cattle situation because Canada has become a net importer of feeder cattle.

First, the demand curve for cattle and beef is inelastic. A small change in quantity has a large influence on price. The beef demand curve is more vertical than horizontal. This compares to the demand curve for wheat, for example, which is rather flat or more horizontal. Consider the diagram shown here.

We can say that Demand Curve 1 is the Canadian/U.S. demand curve in the current environment, where fed or finished cattle move across the border with no tariffs. The Supply Curve represents the total supply of North American fed cattle. We can say that C is the current price of fed cattle, where Demand 1 intersects with the Supply Curve.

A tariff of 10 per cent would cause the North American demand for fed cattle to fall to Demand 2. This is the new demand curve faced by the Canadian feedlot operator. The new price for the Canadian producer would be B,2q where the Demand 2 intersects with the Supply curve. The price faced by the Canadian producer would be lower as the demand curve shifts left.

The opposite is true for the U.S. company buying Canadian fed cattle or beef. The importing company continues to face Demand Curve 1 but there are fewer finished cattle coming into the U.S. This causes the price to increase to A. Notice the price increase in the U.S. is larger than the price decrease in Canada. A 10 per cent tariff on Canadian fed cattle or beef would eventually be absorbed by the U.S. consumer which would pay higher prices.

U.S. wholesale beef prices usually make seasonal lows in January and February. At the time of writing this article, wholesale choice beef was trading at US$333/cwt, which was a fresh 52-week high — and higher than the monthly average COVID high during May 2020. The wholesale beef market is incorporating a risk premium due to the uncertainty in the tariffs. Beef is typically sold on longer-term contracts to companies like McDonald’s and packers are anticipating higher prices for fed cattle.

The influence of the tariff on feeder cattle may be neutral as U.S. producers will have higher price for fed cattle and wholesale beef which may offset a tariff on Canadian feeder cattle. If the slope of the demand curve is equal to the slope of the supply curve, the tariff punishment is split equally by the exporter and importing consumer. This somewhat represents the environment for steel.

If the demand curve is flat, the exporting producer bears the full punishment for the tariff and this would be similar to wheat. The U.S. consumer won’t notice a difference on their domestic bread price and the Canadian wheat price would be lower.

President Trump ran a campaign on lowering food prices but if he tariffs beef and fed cattle, he’ll be paying more for his Big Macs.

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The market appears to be incorporating a risk premium due to uncertainty in beef production in both Canada and the U.S. This has provided Alberta feedlot operators opportunities to lock in favourable margins for the second quarter of 2025.

Feeder cattle prices for short-keep replacements have surged over the past month as the margin structure has improved. Cattle producers have been inquiring over the past month regarding the price outlook for the first and second quarters of 2025.

Cow-calf producers are looking for marketing signals on yearlings while backgrounding operators are also timing sales on fall-placed calves. Therefore, in this issue, I’ll discuss the fed cattle supply projections for the first half of 2025.

U.S. cattle and calves on feed for slaughter in feedlots with 1,000-plus-head capacity as of Dec. 1 totalled 11.982 million head, down 34,000 head or 0.3 per cent from the Dec. 1, 2023 number of 12.016 million head. U.S. feedlot placements during November were 1.796 million head, down four per cent or 69,000 head from the November 2023 figure of 1.865 million head. U.S. feedlot marketings during November were 1.725 million head, down 26,000 head or one per cent from November 2023 marketings.

The U.S. Department of Agriculture’s December Cattle on Feed report was considered neutral for the market in the short-term. Most cattle producers look at the first page of the report. However, the important data is on page five of the report, which shows feedlot placements by weight category. In Table 1 here we have the placements by weight category from the August through December Cattle on Feed reports.

During August and September 2024, total U.S. feedlot placements were down 69,000 head from the same months of 2023. During this same time frame, feedlot placements under 800 lbs. were down 115,000 head. We assume that the placements gain about three pounds per day. Feeder cattle under 800 lbs. probably gain about 2.3-2.5 lbs. per day on average while feeder cattle over 800 lbs. probably gain about 3.3-3.5 lbs. per day on average.

We can add up the number of cattle that will be available for each month. For our April projection, we would start with the August 2024 placements under 600 lbs. Onto this number, we would add the September placements in the 600- to 699-lb. category and the October placements in the 700- to 799-lb. category and so on.

We need the December and January placements to project the total number of cattle available for April but we have a good idea how the trend is developing.

Notice in Table 2 that the number of steers and heifers available in April is projected to be only 1.653 million head, down 50,000 head from April 2024. This is also the lowest number of cattle available in the first half of 2025.

If we do the same exercise for the Alberta and Saskatchewan Cattle on Feed reports, we could see a year-over-year decline of 15,000 in April and 21,000 head in May. Market-ready supplies of fed cattle will be down sharply from year-ago levels on both sides of the border during April and May.

The year-over-year decline in market-ready fed cattle supplies is considered bullish for the feeder market during the spring of 2025. It appears feedlot operators will experience healthy margins which will cause them to bid up the price of replacements. Strength in nearby April live cattle futures will pull up the deferred contracts as well.

The live cattle futures complex has a characteristic known as the “constellation of prices.” This is where the deferred live cattle futures behave or move in tandem with the nearby contract.

If the April live cattle contract is making fresh contract highs in late March, the June and August live cattle futures will also be making fresh contract highs even though market-ready fed cattle numbers are higher in June compared to April. Plan to sell your yearlings or backgrounded cattle in the spring.

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I’ve received many inquiries from cattle producers regarding the price outlook for feeder cattle in 2025. The benchmark for the western Canadian feeder market is central Alberta. During December 2024, quality-genetic backgrounded yearling steers averaging 900 lbs. were trading around $350 per hundredweight (cwt) and similar-weight heifers were quoted at $320/cwt.

Steer calves weighing 700 lbs. were readily trading around $400/cwt and similar-weight heifers were selling for $350/cwt. Steer calves weighing 500-525 lbs. were selling for $500/cwt while heifers were at a $50-$60/cwt discount. The feeder cattle market is factoring in a sharp year-over-year decline in available supplies for the 2025 calendar year.

We mentioned in the previous article that the U.S. closed the border to Mexican feeder cattle after New World screwworm was found near the Mexico-Guatemala border. The U.S. imports about 1.2 million Mexican feeder cattle every year. At this stage, the fed and feeder cattle markets are factoring in no imports of Mexican feeder cattle for 2025. However, ideas are that the normal trade will resume in March or April, but those are only estimates.

U.S. and Canadian fed cattle prices have been percolating higher over the past few weeks. At the time of writing this article in mid-December, Alberta packers were buying fed cattle at $250/cwt f.o.b. feedlot in southern Alberta, up $6-$7/cwt from a month earlier. Cattle on feed in Alberta and Saskatchewan as of Dec. 1, 2024 were 1.092 million head, down six per cent or 68,317 head from Dec. 1, 2023. More importantly, cattle on feed 150 days or longer as of Dec. 1, 2024 were 46,353 head, down 52 per cent from 12 months earlier. Fed cattle supplies are somewhat tighter in the short term.

The nearby live cattle futures are being pulled higher by potential strength in the deferred positions. On the December WASDE (world agriculture supply and demand estimates) report, the U.S. Department of Agriculture lowered its beef production expectations in the third and fourth quarters, factoring no import of Mexican feeder cattle for the 2025 calendar year.

Notice in the table here that third quarter beef production for 2025 was estimated at 6.35 billion lbs., down 430 million from the third quarter of 2024. U.S. fourth-quarter beef production for 2025 was estimated at 6.04 billion lbs., down 890 million from the fourth quarter of 2024. These production estimates have been supportive for the U.S. and Canadian feeder cattle market.

U.S. feeder cattle outside finishing feedlots as of Jan. 1, 2025 are projected to be 23.44 million head, down 776,000 from Jan. 1, 2024.

This is a modern-day low after six consecutive year-over-year decreases in the U.S. calf crop. In Western Canada, fed cattle outside finishing feedlots as of Jan. 1 are projected to total 2.81 million head, down 160,000 head from Jan. 1, 2024.

There was no significant heifer retention in 2024. The industry is expecting U.S. and Canadian cow-calf producers to hold back heifers in the summer and fall of 2025. In the U.S., we’re expecting about 500,000-600,000 heifers will be held back for herd rebuilding. In Western Canada, we’re expecting about 60,000 heifers will be retained. The feeder cattle market has potential to incorporate a risk premium from August through December 2025 due to the uncertainty in available numbers.

The feeder cattle market is expected to trade at or near historical highs throughout 2025. We could see additional strength in the latter half of the year. Feedlot margins have improved in the short term, which should keep finishing lots aggressively bidding for feeder cattle. Secondly, the beef and cattle markets are factoring in lower beef production in the latter half of 2025.

Analysts are factoring in no U.S. imports of Mexican feeder cattle for the calendar year. Feeder cattle supplies in Canada and the U.S. as of Jan. 1 will be down sharply from year-ago levels due to lower calf crops. We expect 2025 will be the first year of major heifer retention in Canada and the U.S., which will result in few heifers in the feeder cattle supply.

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Breakeven pen closeouts are in the range of $250-$255/cwt, so margins are in negative territory for the time being. The margin structure doesn’t look much better moving forward with breakeven pen closeouts in the range of $255-$261 for December through March.

Negative margins will weigh on the feeder market moving forward. In late October, late-blooming yearlings straight off grass averaging 900 lbs. were trading for $330-$335/cwt.

This is about $10/cwt higher compared to a month earlier. Calf prices continue to trade near historical highs with quality-genetic 500-lb. steers readily moving through the ring at $465-475/cwt at most sale barns in Western Canada.

In central Alberta, 350-lb. steers reached $600/cwt, which is the highest price I’ve ever heard besides 10-day old dairy cross calves being picked up for $1,000.

Cattle on feed in Alberta and Saskatchewan as of Oct. 1 were at 843,012 head, down nine per cent or 78,378 head from Oct. 1, 2023. Feedlot placements in the two Prairie provinces during September were 238,221 head, down 11 per cent or 29,088 head from 12 months earlier.

There are lower numbers on feed and placements were down from year-ago levels. This sounds positive but it may be misleading for the winter-fed cattle market. It’s important to note that placements over 900 lbs. during September were up nearly 40,000 head from September 2023.

Table: U.S. quarterly beef production, in millions of pounds.

*= estimates. Source: U.S. Department of Agriculture.

Market-ready fed cattle supplies during December and January will be up about 15,000 head from December 2023 and January 2024. This will cause fed cattle basis depreciation in the Alberta market over the winter, similar to last year. This reinforces the need for feedlots to forward-contract their fed cattle marketings for December through March.

South of the border, a similar situation is developing. As of Oct. 1, U.S. cattle on feed numbers were 11.6 million head, down only 4,000 head from last year. U.S. feedlot placements during September were 2.198 million head, down two per cent or 42,000 head from September 2023. Placements in the top two weight categories were up 20,000 head from year-ago levels. Market-ready fed cattle supplies in the U.S. will actually be up from year-ago levels during the winter months. Fed cattle supplies are not tight. The second factor to consider is that marketing weights are up from 30 lbs. from year-ago levels. Larger supplies and heavier carcasses will result in a year-over-year increase in beef production.

The U.S. feeder market is transitioning from contraction to expansion, which causes prices to reach historical highs and feedlot margins to remain in negative territory for an extended period of time.

The first sign of expansion is the drop in the beef cow slaughter. For 2024, the U.S. beef cow slaughter is expected to finish near 3.02 million head, down 562,000 head from the 2023 total and down one million head from 2022. We’re expecting the Jan. 1, 2025 U.S. and Canadian cattle inventory reports to show a year-over-year increase in heifer retention.

In January and February, we’re expecting feeder cattle prices to trend lower. Fed cattle prices will come under pressure due to the year-over-year increase in market-ready supplies. Seasonally, beef demand drops by about 10 per cent from December to January. The first two months of the calendar year are a period of seasonal low beef demand.

We can also make a case for stronger feed grain prices over the winter. Canadian barley production was estimated at 7.6 million tonnes, down 1.3 million tonnes from last year. The deterioration in feedlot margins will weigh on the feeder market.

U.S. job and wage growth has been a major contributor to economic expansion. Earlier in September, the U.S. Federal Reserve lowered its benchmark interest rate by 50 basis points due to fears of rising unemployment and slower economic growth. We continue to project softer consumer spending over the winter and into next spring. (Editor’s note: this column was written before the Fed’s Nov. 7 announcement of a further 0.25 per cent rate cut.)

There will be lower beef production in the first and second quarters of 2025 but the fed and feeder cattle markets will have difficulty trading higher if consumer spending slows as expected. The economy won’t fall apart but U.S. restaurant and grocery store spending was only up about one per cent from year-ago levels in September. In the spring of 2024, the spending was up six to eight per cent from the same period of 2023. Spending is easing as disposable income evaporates.

Light-weight calves are at extreme highs because of the lower beef production forecast in the final quarter of 2025. The light-weight feeder market is incorporating a risk premium due to the uncertainty in production. The market needs to ration demand.

In conclusion, the fed market is expected to trend lower through the winter due to larger supplies and seasonal low beef demand in January and February. This will weigh on the feeder market. Longer-term, we believe the U.S. economy is vulnerable to weaker consumer spending, which will limit the upside in the fed and feeder market during the spring and summer of 2025.

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Beef demand appears to be softening as unemployment levels increase. In addition to weaker consumer spending, September and October are two months when beef demand typically makes seasonal lows.

In the U.S., market-ready fed cattle supplies appear to be increasing and carcass weights continue to hover sharply above year-ago levels. In Western Canada, feedlots are more current with production and lower placements through the summer months. This will result in a year-over-year decrease in market-ready cattle through the fall and winter.

The North American fed cattle market appears to be trending lower, although basis levels in Alberta are expected to remain firm. The yearling market has been holding value, although supplies in the Prairie provinces are similar to year-ago levels, according to Statistics Canada data.

At the time of writing this article, calf prices are quite variable as the market remains in discovery mode. Feed grain prices are expected to percolate higher and deferred live cattle futures are under pressure.

U.S. feedlot placements during the first quarter of 2024 were 5.428 million head, down only 218,000 head from the first quarter of 2023. During the second quarter, placements were 5.292 million head, down only 171,000 head from the same timeframe of 2023. Placements are down but the U.S. weekly slaughter has also been running below year-ago levels.

Therefore, market-ready fed cattle supplies in the U.S. at the end of September are expected to be in excess of 100,000-125,000 head. There will be a surplus supply of fed cattle at the end of September.

This comes at a time when carcass weights are running 25 pounds above year-ago levels. U.S. third-quarter beef production is expected to finish near 6.675 billion lbs., up 50 million from last year.

U.S. fourth-quarter beef production is projected to reach 6.735 billion lbs., down about 75 million from the final quarter of 2023. Packers will purposely curtail the slaughter pace in the final quarter due to lower beef demand. This will keep market-ready fed cattle numbers above year-ago levels.

In Alberta and Saskatchewan, feedlot placements in the first quarter of 2024 were 394,100 head, down only 11,500 head from 2023. During the second quarter, placements in the two Prairie provinces were 2,298,500 head, down only 17,300 from the same period of 2023.

Unlike the U.S., the Canadian weekly slaughter is running similar to last year while fed cattle exports have been above year-ago levels.

During October through December 2024, market-ready fed cattle supplies in Western Canada will be down 25,000 head each month compared to 12 months earlier. This will keep the Alberta fed cattle basis firm through the fall and winter period. Last year, the fed cattle basis fell apart over the winter, moving to historically wide levels. This fall, the basis will be average to above average.

Canadian employers shed 43,600 jobs full-time jobs in August, causing the unemployment rate to reach 6.6 per cent. Canadian household spending during the second quarter of 2024 was down 1.3 per cent from the same period of 2023. This year-over-year drop in spending is considered a recessionary pace.

U.S. unemployment levels are also increasing. The media reports the “U3” unemployment rate, but some of these people counted as employed may be working as little as one hour per week. The more representative figure of the job market is the “U6” unemployment rate. This level was 7.9 per cent in August. This is the highest level since November 2021 when the U.S. was coming out of recession.

U.S. consumer spending peaked in July but appears to be trending lower in line with the seasonal tendency. The U.S. economy will experience slower growth in upcoming quarters and there is potential for economic contraction over the next year.

Heading into the fourth quarter, market-ready supplies of fed cattle supplies exceed demand, and weights are above year-ago levels. Consumer spending is expected to soften moving forward. This will result in lower fed cattle prices. In Alberta, the basis levels will remain firm due to the lower supply situation, but the overall market will trend lower due to weaker demand.

Statistics Canada released its July 1 livestock inventory report on Aug. 23. Western Canadian yearlings on backgrounding and cow-calf operations as of July 1 were 1.109 million head, up 15,000 from July 1, 2023. Total calves outside finishing feedlots as of July 1 were 2.82 million head, down 74,300 head from July 1, 2023. Yearling supplies are up while calf numbers are down from year-ago levels.

At the time of writing this article, steers weighing 1,000 lbs. were averaging $320/cwt in central Alberta. Yearling prices have been bid up high enough so that margins in the finishing feedlot will equate to negative $200-$250/head over the winter.

Steers averaging 550 lbs. have been averaging $430/cwt in central Alberta. We’re expecting the yearling and feeder market to trend lower during the fall and winter as live cattle futures come under pressure. March feeder cattle futures have been trading at a $10/cwt discount to the nearby September contract. This is a bearish signal. Sell calves and yearlings sooner, rather than later.

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Live prices were quoted at $255/cwt (US$186), f.o.b. feedlot, in southern Alberta. The fed market has come off the summer highs as demand eases moving into the fall period. Monthly restaurant spending on both sides of the border has decreased after making seasonal highs in June. Economic growth in Canada and the U.S. is expected to stall later in fall.

The jobless rate is expected to increase and consumer spending is expected to decrease in both Canada and the U.S. I follow many analysts and they all focus on cattle and beef supplies. When I started writing cattle market analysis 25 years ago, an old-timer told me that if one wanted to be successful as a cattle analyst, you have to focus on the economy and consumer spending for the average American.

This was the best advice I ever received. Focusing on the discretionary spending of the average American consumer defines long-term trends in the cattle market.

The cattle market is vulnerable to softer economic growth. During July, Canadian employers shed 2,100 positions. This follows the elimination of 41,000 full-time jobs in the second quarter. In the U.S., job growth totalled 114,000 jobs in July but this is down from the 12-month average of 225,000 positions. The unemployment rate in Canada and the U.S. is expected to increase over the next six to 12 months.

The U.S. Federal Reserve held its benchmark rate at 5.5 per cent at its meeting on July 31. The Fed rate had been at this level since July 2023. Expectations are that the U.S. central bank will lower its interest rate by 25 basis points on Sept. 18. This will likely be followed by another cut in November or December.

The Bank of Canada cut its policy rate by 25 basis points on June 5 and then again on July 24. The financial industry is expecting two additional rate cuts from the Bank of Canada in 2024. [Editor’s note: this column was written before both the Bank of Canada’s Sept. 4 rate cut to 4.25 per cent and the U.S. Fed’s Sept. 18 rate cut to 4.75-5.00 per cent.]

If we look at past history, the unemployment rate will continue to increase as the central banks lower interest rates. It takes 12 to 18 months for interest rate adjustments to work through the economy. U.S. and Canadian consumers have cut back on spending due to elevated inflation and higher interest rates, which have been in place for a couple of years. In the U.S. McDonald’s same-store sales decreased 0.7 per cent in the second quarter. Last year, same-store sales were up 10 per cent. This is a leading indicator for consumer financial health and the overall economy.

I want to discuss two examples from past history. The Federal Reserve’s (Fed) policy rate peaked in June 1981 at 19.1 per cent and the unemployment rate was at 7.6 per cent. During the major recession of 1982, gross domestic product (GDP) was negative each quarter. Unemployment actually peaked in December 1982 at 10.8 per cent, at which time the Fed funds rate was at nine per cent. The unemployment rate increased and the Fed decreased its policy rate.

In July 2007, the Federal Reserve’s rate was at 5.26 per cent, which was the high prior to the recession. At the same time, unemployment was at 4.7 per cent. The main recession occurred from the fourth quarter of 2008 to the first quarter of 2009. In October 2008, the Fed lowered its policy rate to zero to 0.25 per cent. Unemployment peaked at 10 per cent in November 2009.

Again, the unemployment rate increased and the Fed decreased its policy rate. In both of these cases, the fed cattle market dropped by 20 per cent and a similar decrease was noted in feeder cattle prices. Again, there is a time lag of three to four months for the feeder market, but keep this in the back of your mind.

There is another factor to consider: the U.S. beef cow slaughter during June was 227,000 head, the lowest since July 2017. During 2017, the U.S. cattle herd was expanding. This may be the first signal that the U.S. cattle herd is moving into an expansionary phase. This is also very timely.

Throughout history, the U.S. cattle producer expands the herd when U.S. interest rates are at the roof. Back to my first example, the U.S. cattle producer started to expand the herd in 1981 at which time the U.S. economy was transitioning into a recession. The cow-calf producer is a perfect indicator to time when the cattle market turns from an upward trend to a downward trend.

During August, Alberta yearling steers averaging 1,000 lbs. off pasture were trading for $330/cwt. These steers have a break-even price in December around $275/cwt. This is $20/cwt above current levels. Feedlot margins will move into negative territory during October 2024. The fed and feeder markets are expected to trend lower from October 2024 through December 2025.

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In Central Alberta, a smaller group of mixed big frame steers off grass just over 1,000 pounds apparently sold for $316/cwt in the ring. North of Saskatoon, a larger group of Charolais blended heifers off grass weighing 960 pounds sold for $311/cwt fob farm. Northeast of Calgary, Simmental based steers off grass weighing 940 pounds apparently sold for $326/cwt.  South of Edmonton, a larger group of Angus based steers straight of pasture measured at 830 pounds reached up to $365/cwt. This was a premium for larger group of top quality genetics. In Lloydminster, tan heifers off grass averaging 800 pounds were valued at $357/cwt.

In Southern Alberta, black steers off grass weighing just over 700 pounds were quoted at $370/cwt. In Beaverlodge, a dozen Angus mixed yearling heifers around 740 pounds supposedly traded for $340. In Central Alberta, black steers backgrounded in the lot last winter and then placed on grass this past summer, weighing 720 pounds notched the board at $395.

Northeast of Calgary, black Limousin mixed, weaned steers, coming from green thick pastures weighing 615 pounds reportedly settled at $415/cwt fob farm. In Central Alberta, mixed heifers off grass averaging 662 pounds were quoted at $357. South of Calgary, tan weaned heifers on the card at 605 pounds were valued at $371/cwt fob feedlot.

In Central Saskatchewan, a double pair of tan steers weighing just over 500 pounds were quoted at $465. In Southern Alberta, a handful of black steers weighing 515 apparently traded for $440. In Westlock, a small group of Simmental based 400-pound steers supposedly sold for $465.

Statistics Canada estimated Canadian barley production at  7.5 million tonnes, down from last year’s crop of 8.9 million tonnes. This was considered bullish for barley prices. The U.S. Federal Reserve and the Bank of Canada will likely lower their key benchmark rate at the next meetings due to rising unemployment. If these Central Bankers are worried about rising unemployment, cattle producers should also be concerned higher unemployment causing beef demand to decrease.

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