Are we nearing cattle sector expansion?

The U.S. beef cow herd inventory has been historically low due to market prices and drought conditions, leading producers to sell. Cow slaughter during contraction phases and drought periods can provide insight into producers' intentions to rebuild and market prices. Cow slaughter peaked in 2011 and 2022, but declined by 12% in 2023 compared to 2022. It is projected that total cow slaughter in 2024 will be lower than in 2023, potentially marking the second consecutive year of lower beef cow slaughter volumes. The CME Feeder Cattle Index indicates that prices are impacted by supply and demand dynamics, with prices likely to be supported by tightening feeder supplies during the contraction period. It is possible that there will be another 1-2 years of contraction before entering the expansion phase, but factors such as elevated interest rates and higher input costs may impact the timeline. The expansion phase may unfold more slowly than it did in 2014 due to these factors. [Extracted from the article]