Southern Plains Rain Boosts Cattle Herd Rebuilding Prospects
The Southern Plains have recently received significant rainfall, which is improving the outlook for rebuilding cattle herds. Wheat and other winter small-grain pasture are expected to have a strong start due to warm weather in early October. By January 1, 2027, wheat pasture is anticipated to be stocked, potentially supporting at least 1.73 million head on pasture, similar to last year.
The rainfall is also expected to influence heifer retention for herd rebuilding. The number of heifers on feed is projected to be the smallest since 2017 by July 1, 2027, assuming continued favorable moisture and grass growth. Analysts emphasize that moisture and pasture conditions are crucial for herd rebuilding, overshadowing other economic factors.
Meanwhile, the spot Choice cutout price for beef has slipped after peaking at $389.79 due to an increase in slaughter volumes. This week's slaughter estimate of 548,000 head is the largest since January 16, putting downward pressure on beef prices. The spot Choice cutout price is expected to drop further, possibly to $370, before stabilizing.
In the futures market, the total open interest in live cattle futures increased by 8,298 contracts as of September 29. Commercial accounts added 7,459 new short positions, while managed money increased long positions by 1,733 contracts. The outlook suggests that weather will play a more significant role in cattle pricing this year compared to the previous two years.