Herd Size

Retention or Market? Navigating Female Selection in a Volatile Market

Thu, 26 Mar 2026 12:57:59 GMT

As spring arrives, cow-calf producers face a high-stakes crossroads: which females will stay to build the future of the herd, and which will be culled? While current market optimism is high, making the right choice requires more than just a gut feeling.

On a recent episode of “ Agriculture Today ,” K-State Cow-Calf Extension Specialist Jason Warner breaks down the critical economic factors behind female retention and introduces the data-driven tools K-State Research and Extension offers to help producers maximize their long-term return on investment.

Strategic Planning for Long-Term Herd Growth

At this point in the year, there are many discussions to be had about female retention.

“There’s a lot of really good optimism for the cow-calf sector of the beef industry,” Warner says.

Female retention decisions are critical for producers, especially considering the economic impact on the herd. The investment cost going into females is the first factor to contemplate. Bringing new females in is a long-term investment, so looking at what their rate of return will be is valuable.

Warner says, thinking about long-term goals like herd growth or production is beneficial to retention decisions.

Knowing Your Numbers: The Real Cost of Production

Market projections are one side of decision-making, but producers should also compare their rate of relative return on females.

“Being able to be honest with ourselves on what our production costs are is a really important thing to do,” Warner says

The rate of return per female will reflect what annual production costs are. Parameters like weaning weight, death loss and interest rates influence the costs each year.

Warner says it’s important to consider the varying initial investment costs in each age group of your herd. To aid in these decisions, he recommends using the KSU Beef Replacement Tool .

Built for simple and easy use, these spreadsheets aid producers in determining the Net Present Value (NPV). This value compares if a producer was to keep a female back, take the chances investing in her and project the rate of return versus investing that same money elsewhere.

To ensure accurate projections on your rate of return, Warner explains: “You need to have a good estimate of what you think your production costs are to run those cows on an annual basis, as well as a realistic expectation of what we think feeder calf prices are going to be worth over the lifetime of that female.”

The NPV Advantage: Data-Driven Decision Making

This calculation system is further explained in “ Cost Considerations for Replacements .” In the “Beef Tips” article, Warner, Sandy Johnson, K-State extension beef specialist, and Glynn Tonsor, K-State ag economist, break down the economic views of female retention.

When markets signal expansion of a herd, it takes longer for cattle to reach harvest because of a cow’s biological cycle. This pattern created is known as the cattle cycle, meaning heifers retained at times of low inventory will peak production when fed cattle supplies are increasing while market values decrease.

Timing the Cycle: Navigating Biological Lags

For instance, if the planning horizon is short and forage supplies are fixed, retaining more females may not make sense. But if longer planning outlooks and ample forage or more land are options, retaining females may be the move.

Regardless of whether replacements are raised or purchased, those dollars have an opportunity cost, meaning they could be invested elsewhere.

Using the KSU Beef Replacement Tool allows producers to find how they should look at their value. This spreadsheet system allows producers to look at the impact of a range of annual costs of production. It also has the capability to figure impacts on feeder calf or cull cow sale price projections, both useful numbers to consider.

Setting Your Benchmark for Replacement Value

The principal output of the spreadsheet is the NPV. According to the K-State experts, this value reflects the amount that could be paid for replacements such that the expected rate of return from the investment would be exactly equal to the discount (interest) rate given all the assumptions used in the analysis.

This price could be considered a benchmark, so if producers can buy or develop replacement females at a lower price than the estimated NPV, that is a better economic condition for their herd.

Your Next Read:
From Selection to Breeding: A Veterinarian’s Guide to Productive Heifers

Nalivka: Economics and the Evolution of the Red Meat Industry

Mon, 23 Feb 2026 14:26:24 GMT

Driven by record-high beef and cattle prices, the cattle industry has become a major focus of discussion, not only in mainstream livestock news and information sources, but others as well. The Feb. 16 issue of Barron’s , a leading purveyor of financial news, is one recent example.

In addition, the major television news networks for the past 12 months have carried stories on beef prices and how they have stretched the consumer food dollar.

While the cattle cycle has always been a focus for cattle industry analysts who predict markets, one does not generally expect to see articles like the one in Barron’s that discuss the factors and challenges faced by ranchers that impact their decisions in managing their ranches and cattle, including the size of the herd — reducing the size of the herd or building the herd. Decisions on the ranch are often unique to every ranch or rancher’s circumstances.

I often comment that an average ranch does not exist They each have their own set of circumstances regarding grazing, cattle, financial resources, marketing objectives, and perhaps, most important, family situation, which in many cases has become the key factor regarding the direction of the ranch going forward.

Throughout the 1990s until 2000, the beef and pork industries expanded production, both in the U.S. and globally. As red meat processing capacity grew, the economic incentive for herd building — both cattle and hogs also grew. This all changed as the U.S. was hit with COVID, drought and high grain prices during the short four years from 2020 to 2024.

The economics that had defined both the cattle and hog industries changed significantly. Both industries transitioned from optimistic herd building to the challenge of low prices, increased costs of production and drought. Perhaps more importantly, the structure of the cattle industry began the process of change. And more recently, packers are consolidating production capacity and the process only in the beginning stage.

Many plants are outdated to accommodate the economic opportunities presented by technology. It is a business decision that will transform industry economics and subsequently, the incentive to build cattle numbers.

The beef industry has evolved and consequently, so are the drivers to the industry’s economics. While a shift in demand (consumer tastes and preferences) is likely one key factor impacting industry economics, others including changing the global economics of trade, production practices, and U.S. and global production capacity are having a significant impact on beef industry and the cattle inventory going forward.

I look back over the 40-plus years that I have analyzed beef industry economics and recognize that it is becoming increasingly apparent that the economics driving the industry today are not the same as those of 50 years ago or even 10 years ago.

Record Profits, Reluctant Expansion: Why Ranchers Are Still Hesitant to Rebuild

Wed, 18 Feb 2026 15:24:06 GMT

From drought memories to high interest rates, beef producers today are hesitant to rebuild even with record cow-calf profits. Structural risks are outweighing the immediate price signal.

Patrick Linnell, CattleFax director of market research, frames today’s beef market as a familiar cattle cycle operating under new structural conditions. Linnell was the featured guest in “ The Future of Beef Show ” podcast episode 17.

He shares the idea that history doesn’t repeat itself, but it does rhyme, summarizing cycles still exist, numbers will eventually grow and prices will come down from today’s highs, but the underlying drivers and constraints are different from past decades.

Despite record cow‑calf profits, herd expansion is being slowed by structural headwinds and risk aversion. The industry is planting the seeds of expansion, but the rebuild will be slow and cautious.

Debating the decision of selling or keeping high-priced replacements, Linnell summarizes: “Whether somebody’s looking at retaining that heifer calf or selling her, honestly, it’s hard to argue with either decision.”

Regarding herd size, he predicts 30 million beef cows as likely the upper end of what’s realistically achievable, and only on a long timeline — possibly around 2030 to 2032. He says land coming out of beef production and other constraints cap the upside. Yet the industry has offset some of this land and herd reduction by producing more beef per animal, largely through rising carcass weights.

Bottom line: Linnell points to aging operators and succession uncertainty, labor shortages and high labor costs, high capital and interest rates, alternative land uses and urban sprawl, and memories of drought that push many to sell versus build. Layered on top is greater market volatility as well as policy and social media shocks, which make many producers unwilling to commit to expansion right now.

Here are four takeaways from the podcast:

1. High Prices Are Demand-Driven, Not Just About Short Cattle Numbers

Today’s strong prices reflect exceptional beef demand as much as, or more than, tight supplies.

Linnell notes U.S. beef production is still historically large, roughly around a 25‑year average, and per capita beef consumption has increased, reaching its highest level since about 2010 at just more than 59 lb. per person. Consumers are not eating less beef; instead, they’re paying more because they want the product.

Looking ahead, Linnell expects demand to flatten rather than keep climbing steeply from here. With retail beef prices around $9.50 per pound, he thinks many consumers are at a point where they will continue to pay current levels but are resistant to going significantly higher. Over the long term, he still sees an upward trend in beef demand, but near term, he anticipates a plateau. A severe recession would be the clear downside risk to this picture.

2. Structural Shift: More Beef from Fewer Cows Through Genetics and Carcass Weights

With land and cow numbers constrained, growth is coming from heavier, more efficient carcasses — but that also creates new challenges .

“We’ve been able to just produce more with less, too,” Linnell says. “And that really comes back to how big carcass weights have become.”

Linnell says he doubts carcass weights will decrease significantly. While cheap corn supports feeding cattle to heavier weights, he concedes corn won’t stay this inexpensive forever.

He summarizes today’s heavy carcasses are only possible because of decades of genetic progress. Through continual investment in better bulls, cow‑calf producers have dramatically increased the animals’ genetic potential for growth and carcass performance.

In his view, cattle feeders are simply realizing genetic potential, and any policy or management shifts going forward, will have to balance cow size, forage efficiency and carcass performance.

3. Trade and Trim: Why Imports Are Critical in a High-Demand, Heavy-Carcass World

Heavy carcasses in the U.S. generate fat trim, which must be blended with lean beef from imports to make products like 90/10 ground beef. With ground beef demand also very strong, Linnell sees imports as necessary to satisfy consumer preferences.

At the same time, he expects global beef demand to grow over the next decades, meaning more competition for that lean product worldwide.

4. Outlook: Strong-but-Softer Calf Market, Plus Faster, More Volatile Markets in General

Linnell predicts continued strength in calf prices — likely below last year’s highs, but still near record levels.

“[There is a] very strong likelihood that we are looking at calf prices that are probably below year-ago levels this coming year,” he says, “But it’s still the second-strongest calf market on record.”

He cautions the reopening the U.S. border to Mexican cattle could pull prices down a notch.

On technology, Linnell sees artificial intelligence (AI) as a useful support tool — a great editor and helper — but not something that can yet write a credible forward‑looking market report.

He explains AI is inherently backward‑looking and struggles with regime changes or new normals. For CattleFax, he says the value remains in human synthesis of data, market structure and producer feedback.

Linnell also connects AI and algorithmic trading to the increasing speed and volatility of financial and commodity markets. Markets may end up in the same place eventually, but price moves now happen faster and more violently, complicating hedging and risk management.

Overall, Linnell’s view is the outlook for cow‑calf producers remains historically strong, even with the downside risks from policy, trade and macroeconomic shifts.

Can Small Cow-Calf Herds Be Profitable? 3 Strategies to Compete

Tue, 10 Feb 2026 21:58:19 GMT

Running a small cow-calf operation can be rewarding, but it is not without challenges.

“Larger farms spread their costs over more cows, making it harder for smaller herds to compete. There also tend to be scale efficiencies related to labor, input purchases and other expenses that make larger operations more economically efficient,” says Kenny Burdine, University of Kentucky livestock agriculture economist.

However, Burdine stresses that smaller producers can be highly profitable by shifting their mindsets from volume to efficiency. He encourages producers to consider these three strategies:

1. Keep Overhead Costs in Check

Small operations often fail because they are overcapitalized — meaning they have too much money tied up in equipment and buildings for the number of cows they own.

“Cow-calf operations are capital intensive by nature, so I chose to use the words ‘in check,’ rather than something more specific,” Burdine says. “But the reality is that an operation running 30 to 40 cows can’t have the same overhead structure as one running several hundred.”

Be Lean: An operation with 30 cows shouldn’t have the same tractor or baler as one with 300.
Proportional Investment: Ensure the scale of your equipment matches the scale of your herd.
Side Hustles: If you do own expensive equipment, consider performing custom work for neighbors to spread the cost and add a second income stream.

“Regardless of what approach is taken, small cow-calf operations must be aware that disproportionately large overhead cost structures can be a major drain on profitability,” he stresses.

2. Outsource Strategically to Save Time and Money

You don’t have to do everything yourself. In fact, doing it all might be costing you money.

“The first area that comes to mind is hay production,” Burdine says. “It may be more economical for a small cow-calf operation to purchase hay, rather than own hay equipment and devote land and time resources to producing it themselves.”

3. Explore Value-Added Marketing Opportunities

Since small farms can’t compete on cost-per-head, they must compete on revenue-per-head.

Commingled Sales: Sell in larger, uniform groups through cooperative sales to capture “large lot” price premiums.
Health Programs: Participate in certified preconditioning programs to prove the value of your calves.
Direct-to-Consumer: Explore freezer beef or farmers’ markets. Smaller herds are perfectly positioned to tell a local story consumers are willing to pay a premium for.

Small cow-calf operations should recognize they are unlikely to successfully compete with large operations on scale and cost efficiency. For that reason, they need to approach their operations differently and usee the unique advantages that come with being lean and flexible.

“By carefully managing their overhead cost structures and outsourcing operations that can be done more efficiently by other operations, they have the potential to see significant cost benefits,” Burdine summarizes. “And by exploring value-added marketing opportunities, they may be able to capture revenue benefits as well.”

Your Next Read: Marketing Options for Small Producers

Nalivka: A Positive Track Forward for the U.S. Beef Industry

Tue, 13 Jan 2026 14:13:40 GMT

The U.S. beef industry has experienced significant and positive change over the past five years, and while there is a great deal of discussion concerning U.S. cattle numbers and the impact on beef production, the greater issue is consumer demand.

While it might be easy to develop a comfort level regarding forecasting either the supply of or demand for beef based on key factors, I would strongly suggest it is probably now necessary to think beyond the historical data. The economic incentives are shifting, and subsequently, this creates a shift in the overall industry economics.

Typically, as economists assessing the livestock and meat industry, we think about cattle numbers in terms of the cattle cycle or the expansion or liquidation of the inventory in response to forage availability and/or returns to cow-calf production. A third factor that is often not mentioned is industry structure and the make-up of cow-calf operations regarding size, location and their motivation to own more or fewer cows. This is important, particularly in the current period of record-high prices and cash returns to cow-calf operations.

I have discussed it frequently, but the average cow-calf operation has about 40 cows. More important, for many of those operations, running cows is secondary to crop farming. These smaller operations with fewer than 100 cows account for 91% of the total cattle operations in the U.S., and it is their decisions that largely change beef cattle inventories. Ranchers with 100 to 500 cows account for about 8% of the beef cattle operations.

Heifer retention and growth in the cattle inventory is largely driven by the 91% of operations with fewer than 100 cows, and I think it should be noted that these operations do not generate enough net revenue to suffice as the sole income although 2025 could be an exception.

The point is another source of income has always been required to support the people who had 100 cows or fewer and while 2025 might have changed that situation, it also created the opportunity to reduce debt and put money in the bank rather than increasing the size of the cow herd if the forage is available, and I think that is the conclusion of many smaller operators. Financial certainty became the objective rather than betting against market risk.

There has been meaningful change across every sector of the U.S. beef industry, and while change offers opportunity, it can also increase risk. It is safe to say the changes that have occurred, some subtle and some significant, have had a permanent impact on industry dynamics regarding costs, capacity, marketing and profitability, and ultimately, those dynamics will impact long-term decisions by people in all sectors of the industry.

I doubt if there is any argument about the cattle numbers over the next two or three years. The real question is beyond the next two to three years.

Brazil Surpassing U.S. As Top Beef Producer, Easing Global Supply Squeeze

Thu, 08 Jan 2026 15:53:01 GMT

Brazil surpassed the U.S. as the world’s top beef producer last year, according to market estimates, after the South American country beat output forecasts by hundreds of thousands of tons, easing a global supply squeeze and helping limit a surge in meat prices.

Brazil was already the biggest beef exporter, shipping meat worth almost $17 billion in 2025, according to government trade data released on Tuesday. Beef production numbers are not due until February, but analysts have recently raised their estimates. Farmers have been sending more animals to slaughter, cashing in on high export demand from countries including China and the U.S., where low supply has pushed beef prices to record levels.

Elevated slaughter typically leads to a period of low output as producers hold back animals to breed and rebuild herds. But productivity gains in Brazil may limit or even prevent a downturn, people in the industry say. They noted that farms have been inseminating cattle quicker, fattening them faster and slaughtering them younger.

“Ten years ago, the average age of cattle slaughtered in Brazil was five years,” said Vinicius Barbosa, a commercial manager responsible for tens of thousands of cattle at the CMA feedlot in Barretos, about 260 miles (420 km) north of Sao Paulo. “Now it is 36 months and going rapidly to 24,” he said.

Mauricio Nogueira, head of livestock consultancy Athenagro, said Brazilian beef production far surpassed his forecast in 2025. Output grew 4% for the year, where he had predicted a 2.7% drop. The increase of around 800,000 tons was about equal to total annual exports of Argentina, the world’s No. 5 beef shipper.

Rabobank, which had expected Brazil’s beef production to decline in 2025, now sees 0.5% growth to 12.5 million tons carcass weight equivalent. The U.S. Department of Agriculture in December raised its estimate for Brazilian beef output by 450,000 tons to 12.35 million tons.

If the official numbers confirm market estimates, 2025 will be the first year that Brazil’s output will have surpassed U.S. production, which fell 3.9% to 11.8 million tons in 2025, according to USDA estimates, following years of drought.

Feedlots, Rising Carcass Weight Drive Output

U.S. beef production will fall a further 0.9% to 11.7 million tons in 2026, the USDA said. In Brazil, the USDA and Rabobank project a decline in output, but Nogueira said rising productivity could actually boost Brazil’s production by around 300,000 tons.

Almost 28% of cattle slaughtered in Brazil will be fattened in feedlots by 2027, up from 22% in 2025, according to consultants Scot Consultoria.

“Feedlots do in 100 days for cattle what pasture does in between 18 and 24 months,” said Barbosa, adding that CMA’s Barretos feedlot would process 80,000 cattle in 2026, up from 65,000 last year.

A drone image shows cattle entering a feedlot at CMA Farm in Barretos, Sao Paulo, Brazil.

(Joel Silva/Reuters)

Brazil’s booming corn ethanol industry is generating a byproduct known as dried distillers grains that has higher protein than corn and helps cattle fatten faster, analysts said.

Cows are becoming pregnant more often as farmers adopt more efficient insemination techniques, allowing producers to slaughter more animals without reducing herd size.

Scot Consultoria expects Brazil’s pregnancy rate - the proportion of females that become pregnant during a breeding season - to rise to 54% in 2027 from an expected 50% in 2026.

Better genetics are also improving cattle growth and boosting meat quality, analysts say. And Brazil still has not matched the 90% proportion of cattle passing through feedlots as in the U.S., or Australia’s 40%.

If Brazil’s pregnancy rate rose to 66%, equivalent to neighbouring Argentina, the number of calves birthed each year would rise from an estimated 32 million to 40 million, according to consultants Datagro. The pregnancy rate in Canada is 96%, they said.

Government data show Brazil has 238 million cattle, well over double the 94 million in the U.S. Higher productivity would allow output to expand without increasing cattle numbers or the area of pasture land. That could ease one economic driver of deforestation of the Amazon rainforest.

Brazil’s cattle herd is expected to grow just 4% between 2024 and 2034 while beef production increases 24%, according to Brazilian beef exporter group ABIEC. U.S. beef production will rise 3.5% and cattle numbers will grow 5% over that period, by USDA estimates.

Brazil Key As Top Producers Scale Down

Global beef prices will hinge on whether Brazil can avoid a production downturn this year.

The USDA expects output in the world’s six biggest producers to fall in 2026 by a combined 2.4% - the biggest annual drop in decades - after rising 0.4% in 2025. These producers are Brazil, the U.S., China, the European Union, Argentina and Australia. The list excludes India, which the USDA names as one of the six top beef producers even though that country produces buffalo meat rather than beef.

The USDA expects Brazilian production to fall 5.3% to 11.7 million tons carcass weight equivalent this year. If Nogueira’s estimates are confirmed and output rises instead to around 12.6 million tons, the decline in the top six producers would be just 0.2%.

“There has never been so much international demand for Brazilian beef,” said Guilherme Jank, a Datagro analyst, adding that local beef packers have also ramped up capacity.

“We are witnessing firsthand a significant shift in how the beef cattle supply system works in Brazil, in terms of quality, scale, efficiency, and productivity,” he said.

(Reporting by Ana Mano in Barretos and Peter Hobson in Canberra; Additional reporting by Ella Cao in Beijing and Tom Polansek in Chicago; Editing by Brad Haynes and David Gregorio)

Shrinking Slaughter Capacity: What's Next in 2026?

Wed, 24 Dec 2025 16:36:47 GMT

The long-feared rightsizing of shackle spaces to more closely match the number of cattle has begun.

“The market’s reaction to the November announcement was a good reminder that market volatility still exists even when the supply and demand fundamentals continue to be positive forces into the start of 2026,” says Dave Weaber, Terrain senior animal protein analyst, in his Q1 2026 Outlook .

In late November, Tyson Foods announced its plan to end operations at its Lexington, Neb., beef facility and convert its Amarillo, Texas, beef facility to a single, full-capacity shift.

“Terrain estimates the changes will eventually reduce U.S. slaughter capacity by about 6.6%,” Weaber explains. “However, slaughter plant capacity utilization is still nearly 6% behind historical norms, as the number of cattle is still well short of filling available slaughter capacity.”

Weaber predicts this positive shift in operational efficiency will likely encourage plants to fill available capacity and better compete for the available cattle.

“I expect utilization to decline by about 2% during 2026 when two new plants in Nebraska and Missouri complete their startups,” he adds.

A proposed plant in the Panhandle of Texas that would handle 6,000 head per day has the potential to lower utilization rates back to early-2025 levels if completed.

“Even without additional future slaughter capacity, utilization rates will remain low; fed cattle numbers are expected to decline during the next two to three years because of cow-calf producers’ beef cow herd expansion efforts,” Weaber summarizes.

The reduction in current fed slaughter capacity will help the remaining plants run more volume, improving efficiency by spreading fixed and semi-variable costs across more head and pounds of beef. This positive shift in operational efficiency will likely encourage plants to fill available capacity and better compete for the available cattle.

“I expect that in the near and intermediate term, this effect will at least partially offset the shift in market leverage, which currently favors the packer,” Weaber says.

Markets and Beef Prices Remain Resilient

Beyond the near-term impacts to futures traders’ sentiment, the market impacts of the announced closures are fading.

“Calf, feeder cattle and fed cattle cash markets are already recovering and have posted significant rallies,” Weaber says. “Fed cattle supplies for the first half of 2026 are not going to change. The number of cattle placed into feed yards is the number placed and will be the number that gets slaughtered. The location the cattle get processed into beef may change, but overall beef production is mostly set.”

(USDA NASS, Terrain)

He adds: “ Consumer beef demand and spending remain strong and supportive of cattle prices. Presidential and executive branch rhetoric about lowering beef prices has had little to no impact on retail and wholesale beef prices. Tariff reductions on imported lean trimmings from South America are driving volumes, but prices for contracted loads delivering in the first quarter of 2026 are record high, up 20% from a year earlier.”

“I expect the choice cutout to average between $375 per cwt and $385 per cwt and fed cattle prices to average between $234 per cwt and $238 per cwt in Q1.”

— Dave Weaber

Q1 2026 Price Outlook

“I expect available fed cattle supplies during the first quarter of 2026 to be 6% to 7% smaller than the year prior,” Weaber says. “Even with a 2% shift in leverage (fed cattle price to comprehensive cutout) to the packers’ favor, I expect the Choice cutout to average between $375 per cwt and $385 per cwt and fed cattle prices to average between $234 per cwt and $238 per cwt in Q1.”

By early December, light feeder cattle and calf auction prices have recovered much of the losses incurred since late October and appear poised to start 2026 at record levels.

“Changes to the U.S.-Mexico border status remain the greatest known risk for cattle prices,” Weaber stresses.

Further rallies in deferred live cattle futures will drive the balance of the recovery in prices for heavy feeder cattle that make up the CME feeder cattle price index. He explains demand for light cattle to be turned out on wheat pasture and California coastal range has been a key driver for the rally in light cattle.

Biggest Risk Is South of the Border

Changes to the U.S.-Mexico border status remain the greatest known risk for cattle prices.

“The Mexican government has implemented broad cattle movement and import restrictions within the country as well as greater fly control measures in partnership with the USDA,” Weaber says. “Meanwhile, U.S. and Mexican officials have begun inspections of only one border crossing into New Mexico. Additional cases of New World screwworm have been found in Mexico, which I expect to further delay the reopening.”

Active risk management to preserve operation equity should remain a priority.

“If the border were to reopen, cash feeder cattle and calf prices and feeder cattle and live cattle futures would be the first to move down,” Weaber explains. “The magnitude of the impact will depend on the rate-limiting and cost impacts of the protocols that are implemented and the number of backlogged cattle south of the border.”

One Lesson From Plant Closures

“If we’ve learned anything from the market reactions to the plant announcements, it’s that price volatility should be a focus for producers in all segments of the cattle industry,” Weaber says. “Active risk management to preserve operation equity should remain a priority.”

Your Next Reads:
Navigate Market Volatility with Risk Management Strategies

Beef’s Future: Consumer Demand, Risk Management and the Path to Continued Profitability

Little Indication of Heifer Retention in 2025

Tue, 09 Dec 2025 12:46:36 GMT

As 2025 wraps up there is still little indication of significant heifer retention for herd rebuilding though some retention may be beginning slowly.

The July Cattle report showed the smallest beef replacement heifer inventory in the history of the report back to 1973, although no comparison to last year was possible (the report was not available last year). The October Cattle on Feed showed the percentage of heifers in feedlots was unchanged from July and still above average as it has been since late 2018.

It is true that heifer slaughter is down 6.6% so far this year and is falling faster than steer slaughter, which is down 4.4% for the year to date.

(OSU)

Figure 1 shows average monthly heifer slaughter since January 1978. Average heifer slaughter peaked most recently in January 2023 and has declined 9% as of October 2025.

Heifer slaughter is quite variable and does decrease during periods of herd expansion. However, at this point the decrease in heifer slaughter is not enough to indicate significant heifer retention.

(OSU)

Figure 2 shows the ratio of steer to heifer slaughter over the same 49-year period. The obvious spikes in the ratio (dotted circles) correspond to herd expansions in the years 1979-1982; 1990-1996; 2004-2006; and 2014-2019.

The ratio increases when heifer slaughter drops relative to steer slaughter during herd rebuilding. The current steer:heifer ratio has begun to increase but appears to indicate only the slightest beginning of heifer retention. Additional heifer retention may build in 2026 but the pace appears to be slow.

Your Next Reads:
CattleFax Predicts Profitability Despite Increased Uncertainty
Rebuilding the U.S. Cow Herd: A Calculated Climb
Are We Seeing Signs of Herd Rebuilding?

Building Back Better by Analyzing Your System

Tue, 25 Nov 2025 14:30:48 GMT

How do you develop breeding objectives and identify economically important traits on which to apply selection pressure in your cow-calf operation? The answer lies in understanding your cattle (and their underlying genotype) are just one component of a much larger system.

Your production system is a group interdependent components. Animal-related systems vary from large, extremely complex systems such as the beef industry as a whole, to smaller (but still complex) systems like an individual farm or ranch.

To analyze your own unique cow-calf production system, consider the following:

Your cattle – specifically their genotypes
Your production environment
Your fixed resources and management
Economics

Your cow inventory and bulls used are the means to produce the calves marketed. How would you describe the genetic potential and phenotype of your cow herd, bull battery and calves produced? Is this description a good fit with the other components of your system?

Your production environment refers to all the elements involved in your cow-calf operation over which you have little influence. Examples would include altitude, soils, climate conditions like rainfall, wind and temperature, as well as the quantity and quality of your forage base. Cow-calf production takes place in an extremely wide variety of production environments. A cow herd of the correct genotype to fit their production environment will more efficiently convert grazed forage into pounds of calf raised.

Fixed resources include factors such as the amount of pasture you have for grazing, your ability to grow (or have access to) supplemental feeds and available labor.

Management involves all the practices implemented by you. Examples include vaccination protocols, supplemental feeding, how long will mature cows remain in production and (very importantly), how and when will calves be marketed. Management also involves the selection and mating decisions you make to optimize genotypes in your production system in order to create profit potential.

Economics encompasses all the financial factors unique to your operation. The cost of inputs and value of outputs. Feed, fuel, fertilizer, equipment and labor are input cost. Input expenses are significantly influenced by the cost of maintaining your breeding herd. Furthermore, interest rates on debt and the equity you have in your land and cattle are very important economic factors which often influence marketing plans.

Considering all the components of a production system and how they interact with each other should determine breeding objectives and where selection pressure should be applied. This can result in genotypes that are an environmental fit, are aligned with marketing plans and optimize the use of resources.

Your Next Read: Building Back Better Using Breeding Objectives and Selection Pressure

Tips for Navigating Cow-Calf Share and Cash Lease Agreements

Tue, 28 Oct 2025 12:34:52 GMT

The trend in cattle prices over the last year across all classes of cattle has been strongly higher. These changes in market values and projected adjustments of interest rates are having an impact on beef cow share and cash lease agreements in determining what is “fair” to both cow owners and those who are leasing the cows.

For a cow owner, the following are the four major drivers that determine what is “fair” in terms of a cash lease or percentage of the calf crop the cow owner should receive. Those factors are:

Average cow herd value
Cow value leaving the herd or weigh-up price
Replacement rate
Expected rate of return (interest rate) on cow value

The average market value of weigh-up cows and bred cows is exceptionally strong. Many of the states that are leading in beef cow numbers are no longer in drought and have ample supplies of forage.

Hay and grain prices will in most places be equal to or lower this fall than they were last year. These changes in market value are impacting what is “fair” in terms of the amount of cash lease that would be expected to go to cow owners, or the percentage of the calf crop a cow owner should receive.

This change is due to the current market value of a bred cow versus what bred cow and weigh-up cow values were the last several years. The significant recent increase in cow value means the person owning the cows may need to receive a larger cash lease payment or percentage of the calf crop to reflect more accurately what is “fair” when compared to market conditions just a few years ago. The projected moderating interest rates will also impact what is a “fair” share and cash lease rate as well.

For the upcoming 2026 year, cow-calf share leases or cash leases should be reviewed. The lease should accurately reflect the value of what each person will contribute to the production of weaned calves and what their compensation should be either in cash or in a percentage of the calf crop.

The Center for Ag Profitability hosted a webinar in the fall of 2024 titled “ What is Fair in Cow Leasing: Cash vs. Shares, ” which highlights the differences between these lease agreements. The webinar also presents information on key things that cow owners and operators need to discuss before entering into or when reviewing an agreement.

The UNL Beef website has additional resources that can help both cow owners and those leasing cows in determining what a “fair” lease arrangement should be. Two resources are: the Beef Cow Share Lease Agreements Extension Circular 841 , and a video explaining the use of the Cow-Calf Share Lease Cow-Q-Lator , an Excel® based spreadsheet found here .

Annually reviewing cow-calf share or cash cow lease agreements is prudent under fluctuating market conditions. For cow share or lease agreements to be successful long term, it must be equitable for all parties involved.

$4 Feeder Cattle: Dream or Reality?

Mon, 27 Oct 2025 19:37:11 GMT

As October draws to a close, U.S. officials are reportedly going to meet with Mexican counterparts this week to talk about reopening the border . The possibility of trade resuming, coupled with President Donald Trump’s comments on lowering beef prices and Agriculture Secretary Brooke Rollins’ announcement to “fortify the beef industry,” sent the cattle market spiraling in recent days.

Despite the downturn, the fundamentals haven’t changed: reduced supply and strong consumer demand are fueling record-high market prices.

“The reduction in available supply and robust beef demand to-date has clearly provided price support,” says Glynn Tonsor, Kansas State University professor of agricultural economics. “Tied to that is the biggest risk in my opinion — beef demand. Anything that erodes beef demand strength, most likely macroeconomic and consumer income in nature in my opinion, will put downward pressure on cattle of all weight classes.”

Tonsor says he never gave $4 much thought until the past couple of years.

“If we adjust for inflation or consider production costs, $4 feeders aren’t what they used to be. It takes $4-plus feeders to generate the net returns we used to get from lower prices,” he explains. “These are profitable prices for ranchers — and it’s about time.”

Tonsor predicts feeder cattle prices to continue under current conditions but does not predict increased profitability due to increasing operating costs.

“The 2025 bull market has been exceptional by every measure,” summarizes Lance Zimmerman, RaboResearch Food & Agribusiness senior beef industry analyst. “500-lb. steer prices are now more than 50% higher than last year, and 800-lb. steer prices are nearly there at just under a 50% price increase year-over-year.”

As a frame of reference, the CME feeder cattle cash index, which captures the average 700 lb. to 899 lb. steer price, averaged $367.08/cwt. the week of Oct. 20. This fall, livestock auction markets across the country have reported lightweight feeder cattle surpassing the $4 mark.

“I think it is entirely possible for feeder cattle to get to $4,” says Don Close, Terrain Ag senior animal protein analyst. “However, I think it will be late summer and fall 2026.”

According to Close, there are three critical components for feeder prices today:
1. Mexican border reopening
2. What disruptions could come to the beef-on-dairy supply
3. Feed prices

“Of that list, Mexico border closure is the real wild card,” he explains. “I don’t see a measurable disruption to beef-on-dairy or feed costs in the near term.”

When Will We Hit the High?

Oklahoma State University’s Derrell Peel, Extension livestock marketing specialist, explains the highest average prices are likely a year or more after heifer retention begins.

“We don’t have any confirmation heifer retention has started to any significant level in 2025,” Peel says. “We have already pushed off any signs of herd rebuilding by one to two years longer than I earlier expected, and we are looking at extending it another year if heifer retention does not start in the fourth quarter. Because the response has been much slower this time than previous cattle cycles, prices have certainly gone higher than I would have expected a year or two ago — though I did expect record-high prices.”

Peel predicts the next expansion phase will be different than the 2014-19 expansion cycle.

“The 2014-19 herd expansion was historically rapid, this current one is historically slow,” he says. “It is a combination of a lengthy list of factors that combine to make this a slow response, and it looks like it will remain a slow, lengthy process.”

Close shares his thoughts on the complexities of the current cycle:

Drought and economic stress. “As an industry, we didn’t fully recognize the severity of the drought as well as the degree of economic stress to the sector,” he says. “The fallout of the 2014 to 2015 price drop is still fresh on producers’ minds, so they have been using the prices of the past three years to get balance sheets in order, pay down debt and now are starting to make capital improvements.”
Producer age. “The average age of cow owners is a factor, so many have used current prices to liquidate and retire,” he says.
Female costs. “Replacement female prices that range from $3,000 to $5,000 restricts and scares some away,” he says. “That is only compounded with the addition of current interest rates.”
Cow size. The escalation in average cow size limits how many cows can run on a given unit of pasture.“
Land. “You hear producers make comments on the difficulty to find additional pasture in order to expand,” he says.

“This cycle has been driven or limited from a combination of all the above,” he says. “Our view is we need to rebuild by 2 to 2.5 million head. Keep in mind, given the escalation in carcass weights, we don’t need as many cattle to produce an equal quantity of beef.”

Close adds his thoughts regarding the impact of last week.

“Given all of the turmoil over the past week it is going to be even more difficult to trigger expansion,” he says. “There is no work around for destroyed producer confidence. I think current market action will further delay expansion.”

Ag Economists’ Monthly Monitor Predicts Bull Market to Continue

Cattle prices are expected to stay high well into 2026, according to the latest Ag Economists’ Monthly Monitor from Farm Journal. Nearly half of agricultural economists surveyed (47%) believe the current bull market in cattle could continue another 19 to 24 months, while another 27% say it could last 13 to 18 months. Only 7% expect prices to peak within the next six months.

“This run isn’t over,” one economist wrote. “At current prices we will see no or little herd expansion.” Another adds the fundamental supply side remains tight: “Clear signals that domestic beef production is increasing may be the key catalyst for a market top.”

“This is a nature of biology to some extent, it takes a while once you even start to retain a heifer for that heifer to produce a calf that then becomes a feeder calf that then becomes a fed calf that then becomes beef at the grocery store itself,” says Ben Brown, an Extension economist with the University of Missouri. “I don’t think we’ve seen necessarily the top of this cattle market yet.”

Even if cattle prices are close to seeing a top, that doesn’t mean prices will crash, he adds.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

What Could End the Rally?

When asked what might trigger a peak in cattle prices, responses to the Ag Economists’ Monthly Monitor were mixed — but demand destruction and herd rebuilding topped the list. Economists were asked to choose between five options, including:

The reopening of the U.S./Mexico border to Mexican feeder cattle imports
U.S. economic concerns with fallout from trade tensions with China
Removal of tariffs that would resume high levels of beef imports from Brazil
Demand destruction in the U.S. market

One respondent notes, “All of the above are relevant, but clear signals that domestic beef production is increasing may be more important.” Others pointed to a slowing U.S. economy or producers “beginning to hold back replacement heifers” as potential turning points.

“I have no idea what creates the top, but at current prices, we will see no/little herd expansion,” adds yet another economist.

“Beef Prices Can Stay High Longer Than Most Expect”

Economists agree the U.S. cattle market remains fundamentally strong, supported by limited supplies, robust export demand and solid retail prices. However, they caution the same forces keeping prices high — tight herds, high feed costs and inflation — could eventually cool the rally.

As one economist sums it up: “Beef prices can stay high longer than most expect — until consumers finally say ‘enough.’ That’s when we’ll see the turn.”

Nalivka: The Game has Changed

Fri, 26 Sep 2025 15:22:31 GMT

With record high beef prices, the major topic continues to be when cattle producers will begin to hold heifers for replacements and build herds. Most industry analysts do believe cattle numbers will continue to shrink and, consequently, so will beef production. That is a foregone conclusion. Numbers could only increase over the next two years if heifers were retained from last year’s calf crop, bred this year to calve in 2026. That scenario did not happen.

This situation is only further amplified by the New World screwworm situation in Mexico and closure of the border to any livestock entering the U.S. Regarding that situation, I am more concerned with the potential longer term and more serious impact if NWS were to get into U.S. cattle herds than the immediate impact of not having 1 million Mexican feeder cattle available to U.S. feedlots.

Any disease threat poses a major risk to all parts of the U.S. beef industry — ranchers, feedlots, packers — as well as all industries marketing beef.

Back to the outlook for the U.S. cattle herd; the decision to retain heifers for herd expansion is one that concerns both opportunity cost and risk. Opportunity cost is foregone income resulting from a decision.

In 2025, the decision to retain a heifer this year to expand the herd presents an opportunity cost of $2,000 to $2,500 — the sale value of that heifer. Furthermore, that decision involves risk regarding the income that she could generate as opposed to her current sale value. She would be bred the following year and calved the year after that.

That extends our time to realize any income from that decision to two years, but first, she must have a healthy, marketable calf. Second, what will it cost to run her for those two years until her calf is marketed? And third, what will the market be for that calf?

These are all important considerations to the initial decision to retain her as a replacement heifer, and they pose risk. Of course, those two years could be shortened by one year if she is sold as a bred heifer, which in turn reduces the risk and potentially offsets the opportunity cost when the decision to retain her was made a year earlier. Her market value as a bred heifer could easily increase by $1,000 to $1,500. This is a gross value that does not take into consideration the cost of running that heifer for a year.

The game has changed, and a cattle producer’s decision to retain a heifer goes far beyond the motivation driven by current cattle prices. It is a weighty decision involving not only the current market but also the opportunity cost it presents as well as prices two years down the road. It is more than just the number of calves loaded on the truck today; it is increasingly about creating and capturing greater value with every calf loaded on that truck.

And finally, there is one additional factor to consider that never changes: There is no average rancher. Ranchers and farmers all have unique circumstances that play a role in their business decisions.

Your Next Read: USDA Has No Plans for Financial Incentives to Rebuild Cattle Herd

USDA Has No Plans for Financial Incentives to Rebuild Cattle Herd

Thu, 25 Sep 2025 21:06:50 GMT

Colin Woodall, CEO of the National Cattlemen’s Beef Association (NCBA), says currently USDA does not have plans for an incentive program to help rebuild the beef cow herd.

Woodall joined Farm Journal’s Chip Flory on “AgriTalk” Sept. 25. He was quick to dispel the idea of a herd rebuilding or replacement heifer incentive program.

“There is no financial incentive program,” he says. “Regardless of what you’ve heard, or who you have heard it from, that program does not exist.”

Secretary of Agriculture Brooke Rollins mentioned a potential incentive program in a news release on Sept. 21 .

“In addition, USDA will soon release a significant plan to help rebuild the American cattle supply, incentivizing our great ranchers, and driving a full-scale revitalization of the American beef industry,” the release said.

Woodall explains how quickly the statement in the press release spread, noting it “lit like a grass fire” throughout the cattle industry and markets.

He points out that while Rollins’ team has been in contact with NCBA about potential support for cattle producers, a direct financial incentive is not part of their current plans.

“You can never rule out what the federal government might do,” Woodall says, but also emphasizes that based on current conversations, no immediate program is forthcoming.

Woodall suggests alternatives might include “rolling back some regulations” and making it “easier on cattle producers from a regulatory burden standpoint.”

A concern for Woodall is the potential market impact of an incentive. He says the NCBA team has specifically visited with Rollins’ team about how comments like an incentive program to rebuild the cow herd can have a significant market impact.

He was clear NCBA is not advocating for a financial incentive program, saying: “This is not something that NCBA is pushing for. It’s not something that we are endorsing.”

Thursday, Rollins was in Kansas City at the Ag Outlook Forum hosted by the Agricultural Business Council of Kansas City. During her comments she said because the cattle industry has seen a big drop in producers over the last decade USDA is committed to rebuilding it.

“Low inventory and high demand is not sustainable if we want to feed ourselves,” Rollins says.

She did announce there is no current plan to offer payments to beef producers.

“No plan for direct payments is even under consideration,” she explains. “The government getting involved in markets can easily mess things up.”

The plan will focus more on risk-mitigation tools and hope to attract the new generation of farmers to enter the cattle industry. She says more details will come in mid-October.

Your Next Read: The Battle at the Border

Heifer Economics: Calculating Replacement Costs in Today's Market

Thu, 21 Aug 2025 14:51:07 GMT

As beef producers consider expansion, key expenses to consider are the cost of buying versus the price of developing your own replacements.

Oklahoma State University’s Mark Z. Johnson says there is evidence of an increase in heifer retention with improved drought conditions across much of the Central Plains and summer video auctions reporting a smaller percentage of heifer calves.

“Retention does not appear to be aggressive,” says Johnson, Extension beef cattle specialist, in a recent Cow-Calf Corner newsletter. “With the calf market on pace for another year of record prices providing incentive, herd rebuilding remains sluggish compared to past cycles.”

Lingering drought continues to limit forage availability in key regions while high interest rates and the substantial capital required to develop or purchase bred females further suppresses expansion. Many producers also remain wary of a repeat of the post-2014 market correction, adding a layer of caution to long-term decision-making.

“Even with bred female values at record highs, relative to calf prices, breds may still be undervalued, a sign of producer hesitation rather than a lack of economic feasibility,” Johnson explains.

He says an excellent metric to consider when purchasing bred heifers is the number of calves it takes to pay for the purchase. CattleFax recently reported in 2025 that figure is projected to average just 2.75 calves, well below the long-term average of 4.5 and far beneath the 2015 peak of 9 calves.

“This ratio is likely to rise over time, driven by higher bred female prices, moderating calf values, or a combination of both,” he explains. “If feed resources allow, this dynamic suggests that adding females to the herd today may be the best time from a breakeven perspective to expand.”

(CattleFax)

Keeping Replacements vs. Buying Bred Heifers

Johnson stresses replacement heifers are expensive; not only with respect to dollars invested but also the expenditure of time and labor involved.

“Recent market reports indicate 550-lb. weaned heifer calves selling for well more than $2,000 per head. Those heifers calves are still two years away from weaning their first calf if all goes according to plan,” he explains. “Accordingly, operations looking to add inventory may find a better option of purchasing bred heifers in the current market.”

What Should Bred Heifers Be Worth?

Johnson says assuming weaned calves remain at a value of $2,000 to $2,500 per head over the next few years, your annual cost of running a cow will largely determine what you should invest in a bred heifer.

“The annual cost of maintaining a beef cow is highly variable and has increased tremendously over the past five years,” he explains. “Variable costs such as fuel, fertilizer and herbicides have been blamed as the primary culprits; however, fixed costs such as equipment, hired labor and land have increased as well.”

Total economic costs associated with U.S. cow-calf production for 2018 were estimated to range from $910 per cow for operations with 500 or more cows to $2,099 per cow for operations with 20 to 49 cows.

“These results show significant economies of scale, with costs per cow declining with increased herd size,” Johnson says.

Kansas Farm Management Association estimates the annual cost of running a cow to be approximately $1,551 according to data collected in 2024.

Johnson says it is noteworthy that pasture and feed only account for $684 of that total. Visit AgManager.info for a detailed breakdown of the other actual expenses.

Market fundamentals are strong for a continued robust cattle market until cow inventories start to climb.

“There is currently not much indication of that happening anytime soon,” Johnson summarizes. “That being said, what bred heifers are worth to your operation, and how many calves a female needs to raise in order recapture your initial purchase price, will depend on how much profit she nets each year per calf rather than on the gross value of each calf she produces.”

Four Options to Capitalize on During a Booming Calf Market

Tue, 05 Aug 2025 10:43:41 GMT

Calf values are more than double what they were three years ago, which speaks to considerable opportunity for cow-calf operators to invest in their cow herds.

“With beef cow inventory at a 60-plus year low and demand being very strong, cow-calf operations are clearly in the driver’s seat,” says Kenny Burdine, University of Kentucky livestock agriculture economist, in a recent press release.

Expansion is often the first opportunity that comes to mind in a strong calf market.

“There is likely merit in expansion, if doing so is consistent with the goals of the operation,” he explains. “Some producers are not interested in growing the size of their cow herds due to land constraints, management limitations or other reasons.”

Burdine shares these four investment opportunities, beyond herd expansion, to consider:

Genetics.
“Some producers may choose to use the current increase in cow-calf revenues to improve the genetics of their herds,” he says. “Investment in genetics often has long-run implications, resulting in more valuable calves to sell over multiple years. Sires certainly come to mind, but the current calf market combined with the strong cull cow prices may provide an opportunity to cull a bit harder and also purchase some higher quality females.”
Facilities.
Working facilities are crucial resources for cow-calf operations for numerous reasons. Value-added opportunities such as health protocols, post-weaning programs, castration and implantsare made much easier with quality working facilities. The same is true for receiving, sorting and loading of cattle.
“If facilities have historically been a constraint, the current market may be providing an opportunity to make improvements and position the operation to sell higher value calves in the future,” he adds.
Grazing systems.
Winter feeding days are typically the most expensive days for cow-calf operations as stored feed (hay) is being fed. Improved grazing systems (interior fencing, additional water sources, portable mineral feeders) allow for more efficient use of existing forage during the grazing season.
Burdine says this has the potential to increase the number of grazing days and reduce the number of hay feeding days. In most cases, this results in lower costs per cow per year and puts an operation in a better position when calf prices fall.
Debt service / financial management.
Strong markets also provide an opportunity to make financial moves that set an operation up for the long run.
“Increased revenues may allow an operation to pay down some debt and thereby lower their cost structure going forward,” Burdine says. “Similarly, it may provide an opportunity to build some working capital and lower dependence on operating loans. In both cases, future interest expenses are reduced, which has implications for profitability.”

Burdine says he does not discourage expansion.

“There are likely operations that need to do just that,” he says. “But I also live in an area where land constraints are real and know that expansion is not always feasible. Plus, I have seen situations where operations expanded during strong markets and wished they had not done so a few years later.”

He summarizes, “The current calf market provides a significant opportunity for a cow-calf operation to position itself for the long-run, and that will look different for each one of them.”

Your Next Read: Cattle Prices Predicted to Continue Climbing: Breaking Down the Latest USDA Reports

Several Factors are Driving Strong Cull Cow Markets

Tue, 22 Jul 2025 10:33:41 GMT

Cattle markets have been impressive across the board in 2025, and cull cow markets have been no exception. The monthly average price for 80-85% average dress boning cows in Kentucky set a record in June and may set a new record in July.

June 2025 prices were 16% higher than June of 2024 and 62% higher than June of 2023. This is a trend across all regions of the U.S. as demand remains strong and cull cow supplies remain tight.

I want to briefly discuss some specific factors behind these prices levels:

The most obvious reason for the extremely high cull cow prices has been sharp reductions in slaughter levels. As I write this in late July, beef cow slaughter is down 17% year-to-date from 2024. If this trend continued through the end of 2025, it would represent a reduction in beef cow slaughter of more than 450,000 cows.

The beef cow herd was culled hard from 2021 to 2023, so it is likely that a lot of poor performers had already exited the herd. And of course, the current calf market is encouraging producers to hold on to cows a bit longer than usual. It is also worth pointing out that dairy cow slaughter is down 7% for the year, which is also contributing to the tight supplies.

Consumer demand has been strong and has probably been overshadowed a bit by discussion of tight supplies. Ground beef represents a significant share of beef consumption, and a large portion of cull cow slaughter is targeted for the ground beef market. It is also likely that high retail prices are pushing some consumers towards lower priced ground beef, as opposed to higher priced cuts. While supply is absolutely a major factor, strong demand has added fuel to the fire.

Finally, there is another element that has not gotten as much attention, but that I consider to be significant. Multiple dynamics have pushed cattle to higher slaughter weights over the last few years and that has led to a substantial increase in quality grades.

For some perspective, 10.6% of cattle graded Prime in 2024 and that percentage is running at about 11.8% thus far in 2025. This increase in marbling also means there is an increase in the amount of fat in the trim, which creates additional demand for lean trim to be used for blending. Since cull cows are a source of lean trim, this has also contributed to strong cull cow markets.

Uncertainty: The Word of 2025 for the Cattle Market

Wed, 16 Jul 2025 10:41:37 GMT

Uncertainty is the word for 2025 says Glynn Tonor, K-State livestock economist.

“We are in middle of July, and I was hoping I’d be using that word less, but I think it still applies a lot,” he says on Agriculture Today .

The Agricultural Marketing Service reported the fed cattle market at $235 on July 12, which is still up $25 from a few months ago, Tonsor points out. Volume is lower this time of year, which is not uncommon. He references a couple different lots, including 55 head at $318 and a heavier lot of 924 lb. at $305. He says this indicates a pullback in the market.

“I think when you look over at the futures market, this is the disconnect from the cash market,” he says. “This is where we actually had notable strength this past week.”

August live cattle were at $222 and August feeder cattle at $326.

“We have sort of known domestic supply is tightening, and it looks like that might get ramped up from two different reasons,” he says.

Those being the adjustments in imports from Mexico and the risk of New World screwworm the the domestic herd, as well as tariff announcements to Brazil and the broader tariff situation.

“You could pretty easily make an argument that the herd is known to be small, and some of those adjustments might make it even smaller from a beef availability perspective,” he says.

Even with this market uncertainty, Tonsor says there is notable producer optimism. He met with industry leaders, state beef councils and producers during the recent National Cattlemen’s Beef Association (NCBA) summer meeting in San Diego.

“I’ll call it a cautious tone with it because everybody knows there’s a lot of money at stake in the industry,” Tonsor says. “Now I want to interject here because we’ve had quite a bit of a run up in the cattle market, and that shows up in the producer sentiment.”

When it comes to the box beef cut out, there was a fairly big pullback last week with Choice on Friday at $379, down from $390 the prior Thursday. Select was down $366, down $12 from the prior Thursday.

Tonsor sees some softening in the beef demand through The Meat Demand Monitor, which reported a decline in consumer willingness to pay for meat, with 19% of households reporting improved finances and 34% reporting a decline in June.

Willingness to pay declined in seven of eight items for retail or grocery store for at home consumption and also decreased on seven of the eight meals that are tracked away from homes, which includes dinner from food service, specifically. The trend has shown a decline with June lower than May and May lower than April. Tonsor says consumers are becoming cautious.

“It’s not to say they don’t want meat protein — actually taste still leads today,” he explains. “Meat is having a moment in desirability. It’s not an anti-meat kind of thing at all. I think it’s a macroeconomic concern.”

He sees consumers finding different ways to use meat, stretch it by using it as an ingredient or having smaller portions and are more likely cooking at home versus eating out.

For example, they buy a pound of ground beef and use it in lasagna.

“You can put a few more noodles and a little bit less ground beef,” he adds. “So they still want meat, but if meat is expensive relative to other things in your broader budget, you’re finding a way to stretch that.”

Tonsor emphasizes this is a macroeconomic issue. It’s not about anti-meat, safety or product quality concerns. And unfortunately, cattle producers don’t have control or influence over GDP or household incomes.

Tonsor continues that the million dollar question lately has been if producers are ready to pull the trigger on herd expansion.

“If you are selling cattle for a fairly high price, and you’re comfortable with that, but you’re not necessarily comfortable with it being multi-year, how long will it last? Or you’re spending more to raise that calf than you ever thought you would, and you’re just cautious about it, those are going to give you some pause in pulling the trigger on heifer retention,” he says.

The July cattle inventory report from USDA NASS and the July Cattle on Feed report, which gives a breakdown of heifers versus steers, releases on July 25.

“The percentage of heifers that are in the yard is one of the best measurements for herd expansion,” Tonsor says. “As the population in the feedyard becomes more steers, that generally tells us as more heifers staying at home.”

Watching that retention metric, Tonsor says as the calf crop shrinks, steers and heifers on feed will decline, but it is the percentage of heifers that will be the difference.

“In the near term, you will have a two-year reduction right in beef availability because you took some of the heifers that would have went through the production system sort of immediately through the feedyard to give us beef and kept them at home,” Tonsor concludes. “Now that’s a necessary evil in order to grow the herd, but it will make the clinical tight beef supply story even tighter in the short term to later.”

4 Investment Options for Your Cow Herd

Mon, 30 Jun 2025 19:31:07 GMT

Much has been written recently about the strength of the current cattle market. With beef cow inventory at a 60-plus year low and demand being very strong, cow-calf operations are clearly in the driver’s seat. Calf values are more than double what they were three years ago, which speaks to considerable opportunity for cow-calf operators to invest in their cow herds.

Expansion is often the first opportunity that comes to mind in a strong calf market and there is likely merit in expansion, if doing so is consistent with the goals of the operation. However, some producers might not be interested in growing the size of their cow herds due to land and/or management constraints or other reasons. This article will briefly walk through other opportunities that are worth consideration.

1. Genetics

Some producers might choose to use the current increase in cow-calf revenues to improve the genetics of their herds. Investment in genetics often has long-run implications, resulting in more valuable calves to sell over multiple years. Sires certainly come to mind, but the current calf market combined with the strong cull cow prices could provide an opportunity to cull a bit harder and also purchase some higher quality females.

2. Facilities

Working facilities are crucial resources for cow-calf operations for numerous reasons. Value-added opportunities such as health protocols, postweaning programs, castration, implants, etc. are made much easier with quality working facilities. The same is true for receiving, sorting and loading of cattle. If facilities have historically been a constraint, the current market could be providing an opportunity to make improvements and position the operation to sell higher value calves in the future.

3. Grazing systems

Winter feeding days are typically the most expensive days for cow-calf operations as stored feed (hay) is being fed. Improved grazing systems (interior fencing, additional water sources, portable mineral feeders, etc.) allow for more efficient use of existing forage during the grazing season. This has the potential to increase the number of grazing days and reduce the number of hay feeding days. In most cases, this results in lower costs per cow per year and puts an operation in a better position when calf prices fall.

4. Debt service / financial management

Strong markets also provide an opportunity to make financial moves that set an operation up for the long run. Increased revenues might allow an operation to pay down some debt and thereby lower their cost structure going forward. Similarly, it could provide an opportunity to build some working capital and lower dependence on operating loans. In both cases, future interest expenses are reduced, which has implications for profitability.

To be clear, the purpose of this article was not to discourage expansion. There are likely operations that need to do just that, but I also live in an area where land constraints are real, and I know that expansion is not always feasible. Plus, I have seen situations where operations expanded during strong markets and wished they had not done so a few years later. The main point is the current calf market provides a significant opportunity for a cow-calf operation to position itself for the long run, and that will look different for each one of them.

Your Next Read: Open Heifers Explained: What You Need to Consider to Increase Preg Rates

Beef Cow Slaughter on Pace for 10 Year Low

Fri, 20 Jun 2025 13:13:35 GMT

Changes in beef cow inventory are driven by two factors – how many new bred heifers enter the herd each year and how many cows exit the herd through culling and death loss. As is always the case when calf prices are high, a lot of discussion has been focused on heifer retention thus far in 2025.

Heifers as a percentage of on-feed inventory has been decreasing, but not at a rate that suggests widespread retention. I would expect heifer retention to increase for the rest of 2025 if calf prices stay high and weather cooperates. However, it is important to remember that there is a time lag between heifer retention and the associated impact on the size of the cow herd.

A heifer calf born in the spring of 2025 would likely not have her first calf until spring of 2027 and would not wean that first calf until that fall. The point here being that heifer retention in the second half of 2025 most likely impacts the size of the cow herd in 2027, not 2026.

While there is some delay between heifer retention and cow herd expansion, the impact of cow culling patterns is seen much faster. This is an important point right now because cow slaughter was down by more than 17% through mid-May. If that trend continues through the rest of the year, beef cow slaughter would be at the lowest levels we have seen since 2015. Despite very strong cull cow prices, cattle producers appear to be keeping cows a bit longer in hopes of getting another high-value calf.

For additional perspective, I like to consider beef cow slaughter as a percentage of January 1, beef cow inventory. This is tracked in the figure below from 1986 to 2024 and estimates the percentage of the beef cowherd that was culled each year. During this time, the beef cow slaughter rate averaged just under 10%, but ranged from 7.6% in 2015 to 13.2% in 2022. The high cull rates from 2021 to 2023 also partially explain the lower rates today as the cowherd likely got younger during that time.

(USDA-NASS and Kenny Burdine)

If the current pace continued for the remainder of 2025, beef cow slaughter would come in at about 8.5% of January 1 beef cow inventory. Holding everything else constant, this is a number that would tend to suggest the cow herd would grow. This will be somewhat offset by limited heifer inventory coming into 2025 and it was because of that limited heifer inventory that I had been expecting beef cow numbers to remain steady or slightly decrease this year.

There is still potential for the pattern to change, but the pace of beef cow slaughter through mid-May does suggest that a slight increase in beef cow inventory is possible for 2026.

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Four Key Takeaways from the CattleFax Cow-Calf Survey

Thu, 05 Jun 2025 15:34:33 GMT

Cow-calf producers experienced increasing prices and revenue in 2024, with the rise in revenue far outpacing the increase in cow costs.

CattleFax Analyst Matthew McQuagge shared results of 2024 CattleFax Cow-Calf Survey during a recent webinar.

The just less than 1,000 survey participants represent 41 states and more than 350,000 cows. The average herd size was 385 cows.

Cash cow costs, not including return to management or depreciation, was $753, up $30 compared with 2023. This was a new record in the CattleFax database. McQuagge says unpaid labor and management expenses were reported at $147 per head and depreciation at $134.

“If you add those up, that totals just over $1,000 per head for cow cost,” he says. “That’s pretty significant. But on the flip side, calf revenue jumped up sharply, almost $200 per head, to $1,615 in terms of revenue on a per head basis.”

Average weaning weights were steady reported at 556 lb. for steers and 518 lb. for heifers.

CattleFax did break out the cow costs by region. McQuagge says the biggest jump was in the Southeast region, increasing $45 at $691, but this is the lowest cost across the nation. He says that change relates to forage availability and supply. The northern plains reports the highest cow costs.

Around 25% of the respondents shipped their calves right after weaning, with 55% weaning for a minimum of 45 days.

Some of the key takeaways include:

Calving and Weaning Strategies Matter
Operations with calves born within the first 45 days showed higher weaning weights, better fertility, increased longevity and more uniform calf crops. High-return operations had a larger percentage of calves born within the first 45 days.
“This creates further opportunities within the management of that herd to add value,” McQuagge says. “The marketplace rewards producers who wean and vaccinate for more than 45 days.”
Genetic Investment Pays Off
Bull purchase price directly correlates with calf value, thus producers can improve herd genetics with strategic investment.
“For every increase in $2,500 spent on bull purchase price, it’s resulted in an $85 per head increase in calf value,” McQuagge says. “If we assume a bull is in the herd for four years or sires 75 calves, that results in an added profit or added revenue of over $6,000 on that additional $2,500 investment.”
Vaccination and Value-Added Programs Have Diminishing Returns
Two vaccines typically provide maximum value with additional vaccinations show limited economic benefit.
“Beyond two vaccinations, there’s not much growth or increase in calf value for those additional shots,” he says. “Oftentimes we’ll see that the increase in value for these additional shots does not offset the increased cost.”
While value-added programs still offer potential revenue, their additional value has weakened with rising calf prices.
“Value-added programs, such as organic or natural beef, require different management techniques,” McQuagge says. “Over the last few years, these programs have declined slightly in participation. A lot of this decrease is due to the decrease in additional revenue for these programs, as calf prices have increased so much. One thing we often stress or recommend is to ensure that you have a marketing plan in place to take advantage of the additional work, costs and audits associated with these programs to make sure you’re capturing that value.”
Herd Expansion Planned
Survey results showed herd expansion intentions for operations include: Retaining heifers was the largest percentage of responses at more than 60%, but more than 15% plan to buy bred heifers and/or bred cows.

Reviewing the survey data, CattleFax calculates low-return, average-return and high-return producers. In summary McQuagge says, “Low-return operations really stand out in terms of cow cost, and high-return operations really stand out in calf value. That’s how they differentiate themselves.”

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Nalivka: Herd Rebuilding – A Weighty Financial Decision

Mon, 02 Jun 2025 12:51:08 GMT

As prices across the beef supply chain have hit record highs, industry discussions have become increasingly focused on the question of heifer retention and herd building — regarding both the timing and the extent. As they always have, I have little doubt that record prices will provide plenty of motivation to expand herds — some herds. While soaring prices encourage herd building, they can also become an obstacle.

Herd building, involving heifers, whether through heifer retention or buying bred heifers, is a financial decision on the part of the cattleman and timing is part of that decision. The decision to retain heifers and expand the cow herd to take advantage of a strong market involves foregone income in the current year. The motivation is to generate added revenue once that heifer has a salable calf and that motivation is reasonable. However, that additional income from another calf is two years down the road at the earliest with added production costs to bring that heifer into the cowherd with a marketable calf.

Looking at the numbers, in today’s record-high market, the foregone income part of that decision is running around $1,800 to $2,000 per head based on prices for 550-lb. heifer calves. And then, there is the added production cost for that heifer, which is real and though highly variable across the country and between cow-calf operations, it likely averages nearly $1,000 annually. Again, the rancher’s motivation to increase income through building the herd to sell more calves at record prices is reasonable, but the analysis is not that simple. Those prices are just that — current. Markets change and the potential of a marketable calf is two years away. In markets, two years is a long time!

So, how about buying a bred heifer? That decision does not involve the foregone income from a heifer calf that was not sold with the calf crop. However, that foregone income is now invested cost, which is higher. While the time to generate income from a calf is shortened by one year versus retaining your heifer from this year’s calf crop, prices for bred heifers are generally ranging around $3,500. That is no small figure! Since this discussion centers on heifers and heifer retention, buying bred cows or pairs to build the herd is not relevant to this discussion.

The analysis and discussion of herd building goes beyond record-high markets. It is an important financial decision made by ranchers and farmers and that decision goes beyond current market conditions in a changing market environment. My market outlook discussions have included these points as part of my analysis.

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Nalivka: What’s Impacting the Pace and Extent of Herd Building?

Fri, 24 Jan 2025 20:17:13 GMT

U.S. cattle inventory is largely driven by smaller producers with fewer than 100 cows. According to the 2022 Census of Agriculture, 557,075 cow-calf operations run fewer than 100 cows, which accounted for 89.5% of total cow-calf operations and 39.5% of the total cows. In 2022, the total number of operations represented a 15% drop from the 2017 Census. While the operations with 100 cows or less accounted for about the same percentage of the total cow-calf operations in 2022 versus 2017, they accounted for a smaller percentage of the total cows — down from 44% in the 2017 Census.

I have once again thrown a lot of numbers at you, but the point is that from 2017 to 2022, there was a significant decline in the number of operations with fewer than 100 cows and these operations held a smaller percentage of the total cows.

While some operations increased their cow numbers and moved up the scale in the census survey to 100 to 499 cows, there were also many that simply exited the industry. This would have been evident in the 2022 survey when drought and financial issues prompted liquidation. Unlike herd liquidation in previous cattle cycles, many cow-calf producers exited the industry for good. If that is indeed the case, their permanent departure will be a major factor impacting both the pace and the extent of herd building going forward.

The 2022 Census supports movement toward larger operations. The two groups of operations to drop in number were those with a herd size fewer than 100 cows and 100 to 499 cows. All other operations increased in number of operations. While the total number of operations fell from 2017 to 2022, the number of operations with 500 to 999 cows increased 19% from the 2017 survey and 8% from 2012 to 2017.

Expansion or liquidation of U.S. cattle numbers is mostly driven by small operations. I do believe the decline in their number will impact the pace of herd growth going forward.

7 Ways to Help Beef Producers Evaluate Potential Replacement Heifers

Mon, 02 Dec 2024 19:19:13 GMT

Given the price of replacement beef heifers today, one of the questions veterinarians are helping cow-calf producers address is whether it’s a better decision to raise their own calves for replacements or buy them.

The answer, like with many complex decisions, isn’t a simple yes or no, according to Dr. Ray Stegeman.

The Missouri veterinarian says he has cow-calf producers who do raise their own replacements, but it’s not a practice he recommends for everyone.

“I work with quite a few smaller family farmers who keep heifers and are successful with that. But they know the mama cows and everything about them going back 50 years, which has merit,” says Stegeman, who owns Osage Veterinary Clinic in St. Thomas, Mo., and is a member of the Production Animal Consultation (PAC) network. “But if a producer is just starting out, it’s often advisable to buy bred heifers, given the economics of developing a heifer and the time involved.”

Stegeman, referencing research at Texas A&M and University of Nebraska, says a 200-cow herd size is often a practical starting point for deciding whether buying or raising replacement heifers is the better option.¹

Size Of Calf Crop And Resources

There are several reasons why a 200-head cowherd is a good minimum threshold. For one thing, there’s a large enough calf crop born to provide an adequate number of high-quality prospects for the farm. Three other considerations: this size of operation often has adequate manpower, physical facilities and land necessary to make the undertaking feasible and worthwhile.

“I think we tend to overlook or not realize the costs and resources that go into developing a replacement heifer,” Stegeman explains. “For example, you need to have enough pasture available, you have to keep a bull away from these heifers and raise them separate from the cowherd, and that takes additional resources.”

Here are seven additional factors Stegeman, other veterinarians and beef Extension specialists take into consideration as they work with cow/calf producers who are raising their own replacement heifers.

1. Monitor calves early. Stegeman advises his producers to start looking at their prospects during preweaning, managing nutrition proactively to prevent underfeeding or overfeeding.

“Everyone wants to pick a good-looking heifer, but you don’t want the heifer still on the mother cow to get too fat,” he says. “If we’re creep feeding, we want to watch our starch. If that heifer is too fat at weaning that in and of itself can be a setback.”

Heifer calves that are too fat have been shown to have reduced milking ability once mature, according to Oklahoma State University Extension research. Mammary development is in a critical stage from 2 months of age until about 9 months, or just before puberty.²If a calf is storing considerable amounts of extra fat during that time, excessive fat can be deposited in the mammary gland and inhibit its development.

Stegeman adds if the calf has too much body fat that has the potential to cover up physical defects, which might only be discovered after the producer decides to retain the calf.

In addition, Stegeman likes to talk with producers about nutrition and environmental factors the dam experienced while carrying the calf. He considers whether the mother cows were subjected to drought conditions or inadequate nutrition or other environmental factors.

“Fetal programming factors can result in potential negative productivity in the heifer calf following it through to maturity,” he tells Bovine Veterinarian.

2. Heifer calves born earliest are usually the top picks. Older heifers are more likely to reach the desired target weights by the start of breeding. Early puberty is moderately to highly heritable and positively related to future reproductive efficiency.

“Fertility is driven by genetics, so much so that it’s very important to pick those heifers born early in the calving season as replacements” Stegeman says.

During the selection process, producers with their veterinarian’s help, should look for heifers that are structurally sound, have a wider structural frame and a body type of more rib shape and depth, recommends Mark Z. Johnson, Oklahoma State University Extension beef cattle breeding specialist.³

Johnson adds that fleshing ease equates to breeding females that can better maintain body condition and energy reserves on a given amount of feed.

3. Consider genetic merit. Genetics are an important consideration, as producers plan the type of heifers they want to raise and keep and the traits needed to meet their goals.

“I think one of the problems with the beef industry today is that we’re choosing heifers from the steer pool of genetics – we’re choosing heifers out of carcass genetics,” he says. “There’s opportunity in the beef industry to have maternal herds producing genetically superior replacement females for cow/calf operations to purchase, which will be important going forward.”

4. Put prospective replacements on pasture, once they’re weaned. “We like to develop heifers on the pasture that they’re going to see as an adult cow,” Stegeman says. “They essentially program themselves, and after they calve the first time, they’ll perform better and stay in the herd. Don’t push them too hard with grain,” he cautions. “Go for the pound and a half to 2 pounds of gain per day.”

5. Don’t overlook the importance of temperament. A heifer can look like a great fit for the farm but still be an animal the producer needs to cull, because of her attitude and behavior.

Mississippi State Extension beef specialists encourage producers and their veterinarians to use a chute scoring method to keep temperament records.⁴ When heifers are restrained in the working chute, they can be assigned a score from 1 to 4 (1 = calm; 2 = restless shifting; 3 = squirming; 4 = twisting and rearing). Temperament is a very heritable trait, and removing temperamental heifers from the herd improves safety for farm employees as well as other members of the cowherd.

6. Protocols are needed for heifer vaccinations and deworming. For replacement heifers, Stegeman recommends administering a modified live viral vaccination and an initial leptospirosis vaccine at weaning time, when the animal is 6 to 7 months old.

“We’ll then deworm, often with a combination product, at that time as well,” he says.

Once heifers reach the 12-month mark, they are then administered a second round of vaccinations and dewormer.

“With some of the longer synchronization protocols now, we can give them their last pre-breeding vaccination the day we set them up, as it is approximately 33 days to breed from day one to AI or bull turn out,” Stegeman says. “Often, to save on number of trips through the chute, we try to consolidate processing.”

7. A pre-breeding examination is good insurance. Stegeman recommends that veterinarians reproductive tract score the heifers, either via ultrasound or manual palpation, at around 45 days prior to breeding. He says to measure the pelvis to make sure it is at least 150 square centimeters in size.

“We don’t want to set that number too high. We don’t want to say, ‘Well, my heifers need to be at 180 square centimeters,’ because then we’re just selecting for a big cow,” says Stegeman, citing research by David Patterson, PhD, emeritus beef Extension specialist at the University of Missouri.

With tract scores, Stegeman looks for scores of four and five, which indicate the heifer is ready to breed.

“We can start them on synchronization for breeding,” he says. “If needed, with some of the twos and threes, we’ll put them on feed to hopefully increase their tract score. Research indicates it takes at least 20 days to increase the tract score. If we have enough of the lower scoring heifers, and we deem it necessary, we can sort them out from the fours and fives to bump up their tract score using increased feed,” Stegeman adds.

He notes that the reproductive tract score along with the pelvic measurement provides the producer with some insurance that he is hanging on to the ‘right’ versus the ‘wrong’ heifers.

“The veterinarian can save producers money and time with these practices,” Stegeman says. “If you wait until preg check time to cull those heifers that’s not a good decision for the producer, because he’s got all the extra expense and feed into them up until that time. You might as well put them in the feedlot or develop them out for feeding earlier in the process,” he says.

¹DocTalk, Thomson, Dan. DocTalk Ep 462 - Heifer Development with Dr. Ray Stegeman

²Selk, Glenn. Development of Replacement Beef Heifers. http://agecon.okstate.edu/cattleman/files/ch_21_6th_ed.pdf

³Johnson, Mark Z. Selection of Replacement Heifers. https://extension.okstate.edu/programs/beef-extension/cow-calf-corner-the-newsletter-archives/2024/february-26-2024.html

⁴Rhinehart, Justin D. and Parish, Jane A. Replacement Beef Heifer Development. NRC, 2000. Adapted from NRC Nutrient Requirements of Beef Cattle, 7th revised edition. https://extension.msstate.edu/publications/publications/replacement-beef-heifer-development

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The Future of the Beef Industry: New Survey Data Shows Producers Are Optimistic

Fri, 04 Oct 2024 19:47:55 GMT

Editor’s Note: This article is part of the Drovers 2024 State of the Beef Industry report, which includes an exclusive survey of cattle producers and their thoughts on numerous topics of importance to the future of their operations. To download the full report, click here .

Based on the 2024 State of the Beef Industry survey results, most respondents are simultaneously serious, thoughtful and optimistic about the business.

While parts of the U.S. still grapple with dry conditions, the overall situation has dramatically improved versus this time last year, especially in the middle part of the country. The reprieve from drought coupled with record prices has provided producers an opportunity to focus on other parts of the business.

Supplies are increasingly tight, but much of the market’s strength is attributed to resilient beef demand . Last year’s per capita beef spending totaled $461 — a new record by $14.

Consumers have had every opportunity to trade down when it comes to their protein options, but they continue to choose beef, even at higher prices.

Those consumer dollars are flowing back into the production sector. As a result, fed cattle prices have established another set of new highs in 2024. While overall beef production has waned (due to lower cow slaughter), fed beef production has been running ahead of year-ago levels. That is, higher prices on bigger volume.

Just how high can prices go? That remains to be seen, but the battle for margin between the feedyard and the packer, and ultimately the retail and food service sectors, will be especially important to watch. In the interim, the cow-calf producer holds the cards and will continue to benefit from solid prices allowing the sector to string together multiple years of unprecedented profits. In fact, in the past five years, 49% of respondents report profitability.

Looking to the Future

Producers are thinking to the future with plans to add a family member. In the 2024 Drovers State of the Beef Industry survey, 59% indicate they plan to add a family member to the operation in the next five years. That number was 54% in 2023.

The question that often follows next when adding a family member is herd size. Even though it doesn’t appear the industry will see rapid rebuilding, 51% of producers say they will grow herd size in the next five years. Of the remaining respondents, 38% plan to maintain herd size, 7% will reduce herd numbers and 4% aren’t sure.

While U.S. beef cow inventories stabilize in 2024, Lance Zimmerman, senior vice president, senior animal protein analyst for RaboResearch Food & Agribusiness, says the industry could experience a longer transition period as unprecedented risk mutes profit signals that normally kick-start herd rebuilding efforts.

USDA reported a Jan. 1 beef cow inventory of 28.2 million head, and Rabobank is forecasting a relatively stable cow herd over the next three years between 27.9 and 28.3 million. Cow-calf producers remain relatively quiet about the prospects of restocking pastures. That stands in contrast to the continuous dialogue regarding the production and price risks casting doubts on the segment.

Therefore, numbers will remain tight in the coming years, and they will be further exacerbated if/when producers decide to hold back heifers to rebuild the cowherd. At that point, the industry is likely to see the peak in prices.

For now, there are indications many operations are viable, which is likely why 64% of producers say they are optimistic about the future. In the 2023 survey, that number was similar at 65%.

Breakdown of Survey Respondents

Given this is the second consecutive Drover’s State of the Beef Industry survey, of special interest is the comparison of this year’s results versus last year. That begins with the demographics. Some of the similarities are striking.

For example, 2023’s survey resulted in 40% of respondents managing operations in which three-quarters or more of the business income is derived from cattle; that number was nearly identical this year (36%). Similarly, the 2023 survey indicated 82% of respondents preconditioned their calves before selling, and this year’s number came in at 79%.

Therefore, many of the key year-over-year comparisons are especially meaningful and begin to tell some sort of story in terms of trend (versus one-offs) about what’s really going on in the industry.

Drovers State of the Beef Industry

(Farm Journal)

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How Historical Cattle Cycles Are Shaping Inventory and Production Today

Fri, 27 Sep 2024 18:31:25 GMT

Editor’s Note: This article is part of the Drovers 2024 State of the Beef Industry report, which includes an exclusive survey of cattle producers and their thoughts on numerous topics of importance to the future of their operations. To download the full report, click here .

By Lance Zimmerman, senior vice president, senior animal protein analyst for RaboResearch Food & Agribusiness

Past cattle cycles provide an outline for the tendencies that typically shape inventory and production over years and decades. While U.S. beef cow inventories stabilize in 2024, the industry could experience a longer transition period as unprecedented risk mutes profit signals that normally kick-start herd rebuilding efforts.

USDA reported a Jan. 1 beef cow inventory of 28.2 million head, and Rabobank is forecasting a relatively stable cow herd over the next three years between 27.9 and 28.3 million. Cow-calf producers remain relatively quiet about the prospects of restocking pastures. That stands in contrast to the continuous dialogue regarding the production and price risks casting doubts on the segment.

The last herd rebuild started in 2014, but remember the short-term milestones that preceded it. The percentage of heifers in the fed cattle slaughter mix peaked in 2010, the beef cow cull rate spiked in 2011 and beef replacement heifer inventories didn’t post a year-over-year increase until Jan. 1, 2012.

More recently the heifer slaughter mix peaked in 2023, and the cull rate reached multiple-decade highs in 2022. Now, the focus is on heifer retention, and that remains a sticking point for this rebuild.

Macroeconomics outline declining supplies and steady demand, or increasing demand and steady supplies, lead to higher prices.

Supply Versus Demand

For nearly three decades, the U.S. beef industry has been in a declining supply and increasing demand market. Absolute prices and volatility have increased significantly over that time, but per-head profit margins have not followed the same uptrend.

Commodity producers largely operate on thin margins, and competition within and across the beef and cattle producing segments has kept margins low, while volatility in returns has increased. That is why U.S. producers are expressing more caution during this rebuild.

The beef consumer’s role in supporting each U.S. cowherd rebuild has been discussed many times. Tighter supplies motivate higher meat case and menu prices, allowing producers to receive a higher percentage of beef spending. The July average USDA all-fresh beef retail price pushed to new highs at $8.15 per pound. Even with relatively steady beef demand, Rabobank expects annual average retail beef prices to approach $9.50 per pound around 2027.

That means 500-lb. steer calf prices could advance to annual averages near $400 per cwt as early as 2026, and replacement female prices follow the calf market. It is possible $4,000 bred heifers are in the producer’s future. CattleFax estimates current prices around $2,800 per head. That is creating pause for a segment dominated by part-time operators facing production risks and less of an appetite to take on more.

El Niño didn’t offer the weather benefits needed to recover pastures in major cow-calf producing regions in 2023 and early 2024, and a return to La Niña in late 2024 will cast doubt on forage availability.

A decade ago, interest rates were 3% to 4%. Today, those loans have an 8% to 9% rate. Aging producers are looking to transition out of the business, but younger producers are struggling to fill the void.

These pressures will likely amplify the rate of consolidation within the cow-calf segment and silence opportunities for smaller operations to expand profitably going forward.

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Are Cattle Producers Rebuilding Their Herds Now?

Wed, 25 Sep 2024 16:09:29 GMT

Editor’s Note: This article is part of the Drovers 2024 State of the Beef Industry report, which includes an exclusive survey of cattle producers and their thoughts on numerous topics of importance to the future of their operations. To download the full report, click here .

America’s beef cattle inventory continues to tighten, pushing market prices to record levels. Under normal conditions, that would lead to anticipation about building herds again. If this were a typical cattle cycle, the elements for expansion — ample forage and record-high cattle prices — would be in place. However, the current cattle cycle is not typical other than the recent liquidation when drought forced significant culling and resulted in the smallest U.S. cattle herd inventory in 70 years.

The pace of expansion or herd rebuilding in the current cattle cycle will be much slower than past cycles, and the extent of herd building will also be reduced. That has been the case for previous beef inventory expansions since 1975’s peak of 132 million head as subsequent cycles have all peaked below the previous cyclical peak. For instance, the 1982 peak was 115 million head, 1996 at 104 million, 2007 at 97 million and 2019 at 95 million. What has changed?

Production-wise, efficiency has increased and the industry produces significantly more beef with fewer cattle, which impacts prices. When expansion begins, smaller increases in inventory pull prices lower. But there are other crucial factors that influence individual ranchers’ plans to continue in the cattle business.

Volatility Will Increase

The age of farmers and ranchers is critical as decisions are made going forward. Closely tied to age is the financial stress of the market over the previous four years. This plays a greater role for part-time cattle producers. The drought coupled with low prices and accelerating costs of production are key to the decision. I often hear ranchers comment: “Why would I or my spouse continue working in town to support cows that are draining our bank account?”

For many of those part-time cattle producers, the cows went to the sale yard. Will they be replaced? Only time will tell, but many will not return to the business. The other major consideration of this cycle is the price of replacement cows or heifers.

Ranchers are rightfully wary of a market that could become increasingly volatile. It’s a major risk to invest in cows or breed heifers with high maintenance costs that won’t deliver a marketable product for two-plus years.

The decision to own cattle or expand an existing herd will be influenced by high interest rates and rising production costs, further slowing the speed of any herd rebuilding.

Rebuilding The Cowherd Remains On Hold

One of the biggest factors on everyone’s mind revolves around if and when cow-calf producers might begin rebuilding the cowherd. Much of that decision to date has been contingent on the weather. However, despite improving forage availability and conditions (and higher prices), producers remain tepid about running more cows.

Drovers State of the Beef Industry 2024 Report

(Farm Journal)

The 2024 Drovers State of the Beef Industry survey asked, “What are your plans to restock your cowherd (as a result of the drought)?”

In both 2023 and 2024, 21% of respondents indicated “next year.” The process remains on hold. However, some of that reluctance might prove to be permanent. One key difference in this year’s survey has more producers indicating they have “no plans to restock” (23% versus 14% in 2024 and 2023, respectively).

There’s not much appetite to aggressively rebuild the cowherd. Producers are cautious when it comes to running more cows.

Drovers State of the Beef Industry 2024 Report

(Farm Journal)

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A Glimpse Into the Cattle Inventory Black Hole

Tue, 24 Sep 2024 14:12:15 GMT

Drovers State of the Beef Industry 2024 Report

(Source: USDA; CattleFax Estimates)

Cows and Heifers

Beef cow inventories are estimated to be 400,000 below a year ago. Beef cow slaughter has been down sharply but not enough to overcome the record-low bred heifer inventory as of Jan. 1, 2024, most of which have now calved and would be counted as cows.

Beef replacement heifer inventories are likely steady to slightly higher but remain historically tight, estimated up a narrow 50,000 head from last year. Spring 2023-born heifers were likely retained and bred at a stabilization pace, with numbers roughly even with year-ago. A few more heifers might have been retained from the fall 2023 calf crop, although this is a smaller percentage of the nation’s herd. The expectation is for a mild expansion pace of heifer retention this fall.

Dairy Cows

Dairy cow inventories are also likely steady to slightly smaller, estimated 50,000 head lower due to a shortage of replacements coming into the year, despite a steep decline in dairy cow slaughter. The dairy replacement heifer shortage, largely due to the beef-on-dairy revolution, will remain a headwind to stabilization and growth of the herd in the near term.

Calves and Feeders

The July report also contained the first estimate of the current year’s calf crop. CattleFax expects the 2024 calf crop to be 700,000 fewer head, a record low, reflecting a smaller breeding herd coming into the year. The smaller calf crop will continue to translate into tighter feeder cattle and fed cattle supplies down the road.

With total on-feed numbers up 100,000 head from year-ago, the feeder cattle and calf supply remaining outside of feedyards would be down 850,000 head or 2.5% from last year, also record small. The July 1 outside supply figure would include the new spring-born calf crop as well as the remaining 2023-born feeder cattle and calves.

Bottom Line

Despite the absence of the July Cattle Inventory report, CattleFax estimates, based on numerous other data sets, cattle inventories will continue to tighten, but with mixed signs of stabilization. Expansion and retention patterns will be closely monitored this fall with confirmation in January 2025’s inventory report.

Reprinted with permission from CattleFax.

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