Meat & Livestock News

U.S. Cattle Industry Faces Three Pivotal Questions for Herd Rebuilding

By Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

The U.S. cattle industry is at a critical juncture, confronted with the pressing dilemma of how and when to kickstart herd rebuilding. This intricate issue is encapsulated in three core questions: What measures are essential? What is realistically achievable? And what are the producers’ actual intentions?

The Shrinking Beef Cow Herd

Persistent droughts from 2020 to 2022 have led to a significant contraction of the U.S. beef cow herd, which stood at a mere 28.9 million head as of January 1.

This marks the lowest count since 1962 and forecasts suggest this decline is set to continue into 2024.

Market Dynamics and Production Bottlenecks

The demand for U.S. beef remains strong on both domestic and international fronts, signalling the need for a more substantial herd.

However, meeting this demand will necessitate a strategic shift towards increased heifer retention and reduced cow culling.

Such changes are expected to limit cattle slaughter and decrease beef production by 15-16% by 2025, compared to the peak levels of 2022.

Environmental Roadblocks

As of early October, drought conditions are affecting 40% of the U.S., including regions that are significant contributors to the beef cow population.

While the rate of herd liquidation has somewhat slowed, it has not yet stabilised, indicating ongoing environmental challenges.

Constraints on Herd Expansion

Recent data underscores the industry’s unpreparedness for immediate herd expansion. Female slaughter has averaged 51.7% of the total cattle slaughter over the past year, marking the highest rate since 1986. 

This suggests that several months of reduced female slaughter are needed before any meaningful herd expansion can commence.

Producer Sentiments and Financial Hurdles

Various economic barriers, including high input costs and rising interest rates, are holding back producers from retaining heifers.

Older producers are particularly considering exiting the industry, making 2024 more likely to be a year of stabilisation rather than expansion for the beef cow inventory.

Given the existing environmental and economic headwinds, a rapid rebuilding of the herd seems improbable. When it does eventually start, the process is likely to be a long-drawn one, albeit supported by strong market prices.