Rebuilding the U.S. cattle herd could take years, as current market dynamics are pushing ranchers to sell rather than retain cows, according to a CoBank Knowledge Exchange research brief.
With steer and heifer calf prices at record highs, experts predict it may be 2026 or 2027 before heifer retention rates and the beef cow population begin to rebound.
“When it comes to cow-calf operations, a financial analysis helps determine if a producer will make a better margin from keeping a calf or selling it,” CoBank analyst Abbi Prins wrote. “Softening feed prices have improved incentives to retain heifers, however beef calf prices are at record high. These unique market conditions mean a no-brainer decision for some cow-calf operators to sell new crop calves for immediate cash flow.”
Prins wrote the prolonged and steep decline in beef cow numbers has raised some concerns.
The U.S. is now in its fifth consecutive year of shrinking beef cow numbers, which have dropped by 2.5% year over year to 28.2 million head. According to USDA data, this represents the lowest inventory level since 1961.
Drought has been a key factor in the decline of cows producing calves in recent years. Prins noted after ranchers endured drought in 2021 and 2022, relief happened in 2024. With hay prices easing in 2024 compared to the early pandemic years, cow-calf operators can begin replenishing their winter feed supply once they recover from the financial strain of high hay costs in recent years. However, Prins said hay prices remain significantly higher than during the last herd rebuilding cycle from 2014-19.
While forage conditions and prices have improved, Prins said there is a $300 upside for producers to sell calves rather than raise them.
“Right now, it’s not worth the risk to hold onto the heifers as the potential upside of selling the calf has immediate pay off,” Prins wrote.
Prins cited that the 2024 average prices for 550-pound Kansas heifers was $276/cwt. Steers fetched $314/cwt, according to the Livestock Marketing Information Center and USDA. A weaned calf priced at $294/cwt at 550 lbs. could sell for $1,617 to be finished at a feedlot.
On the flip side, according to the Kansas State University Beef Cow-Calf Budget, raising that heifer for one year could cost $1,315, or over $2,600, before she has her first calf. Average bred heifer prices range from $1,500-2,600 per head in states like Kansas, Missouri, Nebraska, Oklahoma and Texas.
CoBank said that even if ranchers began retaining heifers this year, the heifer could not have her first calf until 2026. Heifer retention may not begin in earnest until 2025 or later.
Meanwhile, fewer cattle entering processing plants will keep beef and cattle prices elevated for cow-calf and feedlot owners while packer margins tighten. By July 2024, beef packers were losing nearly $100 per head, according to the Sterling Beef Profit Tracker. This trend can’t continue indefinitely, as even with rising cattle prices, the supply of animals for sale is limited.
“Once the herd does start rebuilding, a drastic change in beef cow numbers is unlikely as the growth could look more like a slight bump in cow inventory,” Prins wrote. — Charles Wallace, WLJ contributing editor
