You Ain't Seen Nothing Yet: Why Economists Say Cattle Prices Will Soar Even Higher This Year

There’s no doubt the U.S. cattle inventory continues to shrink. The latest numbers from USDA out this week showed  the U.S. cattle inventory dropped 2% year-over-year with 87.2 million head of cattle and calves on U.S. farms as of Jan. 1, 2024.

Other key figures from the report showed:

• Of the 87.2 million head inventory, all cows and heifers that have calved totaled 37.6 million.
• There are 28.2 million beef cows in the United States as of Jan. 1, 2024, down 2% from last year.
•  The number of milk cows in the United States decreased slightly to 9.36 million.
• U.S. calf crop was estimated at 33.6 million head, down 2% from 2022.
   

“Not really a lot in the way of surprises in this report, it was pretty well anticipated,” says Derrell Peel, Extension Specialist for Livestock Marketing with Oklahoma State University. “I think the take home message here is pretty powerful in that this industry continues to get smaller. We got smaller through 2023. So we're coming into 2024 with smaller cattle inventories pretty much across the board.”

Peel points out with the U.S. beef cow herd the smallest since 1961 and the all cattle inventory the lowest since 1951, it’s setting the market up for more strength in cattle prices. 

“We have gotten smaller than we intended to be smaller than we need to be from a market standpoint,” says Peel. “And I think that's going to be where we jump off to think about where we go from here.”

Nevil Speer of  Turkey Track Consulting says not only did the latest report shows signs of further contraction, there currently aren’t any signals showing the rebuilding of the U.S. cattle herd has started to take place. 

“40% of the on feed population is heifers last quarter. So, there's no indication that we're ready to dig back in and start rebuilding,” says Speer. 

So, could the U.S. cattle market see higher highs? Dave Delaney of Ever.Ag says it’s a bit of a loaded question, but volatility will continue to take place. 

“Short-term, I think as we look at the fat cattle market, we're on a plane of steady to maybe a softer undertone for a short period of time, but I do believe we are going to go higher in the fat cattle market, as well as the feeder cattle market.”

“We're nowhere near done with this thing,” says Peel “We had a tremendous runup in prices in 2023. And you can look at the setup last year, and I know some producers are thinking, 'Okay, we've got our run up that we're close to the top.' And we're comparing a lot to 2014 and 2015, which were the last highs, but those high prices in 2014 and 15 happened a year to a year and a half into herd expansion.”

Peel says the highs of the market will be in once the industry starts to retain more heifers and the rebuilding process has taken place. 

“That’s what puts the highs in the cattle market. So, we haven't started that process yet. That's all ahead of us,” says Peel.