Rebuilding the U.S. Beef Cow Herd Expected to Take Years

DENVER (August 15, 2024)—The U.S. beef cow inventory has fallen to its lowest level in more than 60 years, as cow-calf operators have faced weather-damaged forage, expensive feed and historically high calf prices. Steadily shrinking beef supplies have disrupted cattle markets in recent years and led to sharply higher retail beef prices. With no significant changes on the horizon that would quickly reverse the trend, rebuilding the U.S. beef cow herd to historic norms is shaping up to be a yearslong undertaking. 

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

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

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

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

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

“After a couple of tough years with poor weather impacting forage production and higher interest rates, it’s critical for producers to have cash flow to pay down debt and build up feed inventories before adding to the herd,” said Prins. “Once the herd does start its rebuilding process, it’s unlikely there will be a drastic change in beef cow numbers as the growth will probably look more like a slight bump in cow inventory.” 

Read the research brief, Beef Calf Prices and Forage are Stalling the Herd Rebuild.

About CoBank

CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 77,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.