The US beef industry may not see breeding cow numbers return even to 2023 levels for another three to four years, as high prices for young cattle incentivize breeders to sell rather than retain females for herd rebuilding.
This is the view of CoBank, a US agricultural bank, in a report released in August, highlighting the significant impact of decisions made by small US beef producers (with 50 heads or fewer) on the performance of the national herd.
According to the report, published by the site Beef Central, the US beef supply heavily relies on a large network of small producers to raise calves. “In fact, 25 percent of the US beef cow inventory can be found on operations with 50 or fewer heads. Since these operations generally do not rely on these animals as a sole source of income, economic decisions do vary from larger operations,” it states.
When unexpected events, such as widespread drought, damage pasture conditions, forage production, and cow retention rates suffer. Drought is one of the main reasons why the number of US cows producing calves has decreased in recent years.
Although this movement is not uncommon, the duration and depth of the decline in the number of beef cows in the US have been surprising, and even concerning, according to CoBank. The US is currently in its fifth year of declining beef cow numbers, falling another 2.5% year-on-year to 28.2 million head. These inventories are the lowest since 1961, based on USDA data.
Some of the industry’s leading analysts do not expect the beef sector to return to 2023 levels for another three or four years. Some even suggest that the contraction could continue for two years beyond that.
Rising Prices
If US steers and heifer calf prices remain at record levels, it may be 2026 or 2027 before heifer retention rates and beef cow populations begin to rise again, CoBank said.
“Even when ranchers start keeping more heifers, rebuilding the US beef cow herd will be a slow roll. For example, it will be 2026 before a heifer calf born in 2024 has her first calf and joins the beef-cow population. However, it’s more likely 2025 or beyond will be the first year of retention,” the report states.
Fewer cattle entering US processing plants will lead to continued high beef and cattle prices for cow-calf owners and feedlots, and tighter margins for meatpackers. According to Sterling Beef Profit Tracker, US beef processors were losing close to USD 100 per head in July 2024.
Brazil and Australia lead exports
Amid this scenario, Brazil and Australia, other traditional global beef exporters, have increased their shipments to the US, taking advantage of the reduced internal supply of American beef. Additionally, supplying countries are also seizing the opportunity to gain ground in international markets traditionally served by US exporters.