Experts Say Rebuilding U.S. Beef Herd Could Take Years

USAgNet - 08/30/2024

The U.S. beef cow inventory has fallen to its lowest level in more than 60 years, as cow-calf operators have faced weather-damaged forage, expensive feed and historically high calf prices. Steadily shrinking beef supplies have disrupted cattle markets in recent years and led to sharply higher retail beef prices. With no significant changes on the horizon that would quickly reverse the trend, rebuilding the U.S. beef cow herd to historic norms is shaping up to be a yearslong undertaking.

According to a new research brief from CoBank's Knowledge Exchange, current market conditions are incentivizing cow-calf producers to sell heifer calves rather than retain them for future breeding purposes. From a financial standpoint, the benefit of selling calves for immediate gain far outweighs the risks of investing in those calves to become part of their reproductive cow herd.

"Given the route calf prices have gone, it's a become a no-brainer decision for some cow-calf operators to sell new crop calves for immediate cash flow," said Abbi Prins, livestock industry analyst for CoBank. "As feed prices soften, there is some improved incentive for retention. However, these are unique market conditions as beef calf prices are at record highs."

America's beef supply relies heavily on a large network of small producers to raise calves. When conditions become unfavorable due to events such as widespread drought, forage production and beef cow retention rates suffer. Drought is one of the primary reasons the number of cows producing calves has declined in recent years.

After persistent drought conditions that took root in 2021 for the states with the highest beef cow populations, some relief is being found in 2024. Pasture conditions in all regions of the country had improved to varying degrees as spring and summer grazing began. Hay prices have also improved, allowing cow-calf operators to start rebuilding their winter feed supply. However, if there is not enough hay to feed the current herd or additional replacement heifers, producers will not hold on to heifers to start rebuilding their herds.

Ultimately, calf prices will be the determining factor when it comes to whether the U.S. beef cow herd retracts further or begins to grow. Prins' analysis suggests there is currently a $300 upside to selling a calf rather than raising it when comparing the market sale and first year expenses. If steer and heifer calf prices remain near record high levels, it could be 2026 or 2027 before heifer retention rates and the beef cow population begin ticking back up.

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